What trends should we look for it we want to identify stocks that can multiply in value over the long term? Firstly, we’ll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. This shows us that it’s a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. With that in mind, we’ve noticed some promising trends at Ascom Holding (VTX:ASCN) so let’s look a bit deeper.

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For those who don’t know, ROCE is a measure of a company’s yearly pre-tax profit (its return), relative to the capital employed in the business. To calculate this metric for Ascom Holding, this is the formula:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)

0.084 = CHF8.6m ÷ (CHF191m – CHF88m) (Based on the trailing twelve months to June 2025).

Therefore, Ascom Holding has an ROCE of 8.4%. In absolute terms, that’s a low return and it also under-performs the Healthcare Services industry average of 12%.

Check out our latest analysis for Ascom Holding

roce

SWX:ASCN Return on Capital Employed October 5th 2025

Above you can see how the current ROCE for Ascom Holding compares to its prior returns on capital, but there’s only so much you can tell from the past. If you’d like to see what analysts are forecasting going forward, you should check out our free analyst report for Ascom Holding .

We’re delighted to see that Ascom Holding is reaping rewards from its investments and is now generating some pre-tax profits. About five years ago the company was generating losses but things have turned around because it’s now earning 8.4% on its capital. And unsurprisingly, like most companies trying to break into the black, Ascom Holding is utilizing 20% more capital than it was five years ago. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

One more thing to note, Ascom Holding has decreased current liabilities to 46% of total assets over this period, which effectively reduces the amount of funding from suppliers or short-term creditors. So this improvement in ROCE has come from the business’ underlying economics, which is great to see. However, current liabilities are still at a pretty high level, so just be aware that this can bring with it some risks.

In summary, it’s great to see that Ascom Holding has managed to break into profitability and is continuing to reinvest in its business. Astute investors may have an opportunity here because the stock has declined 66% in the last five years. That being the case, research into the company’s current valuation metrics and future prospects seems fitting.

Like most companies, Ascom Holding does come with some risks, and we’ve found 3 warning signs that you should be aware of.

While Ascom Holding isn’t earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.