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Space-Communication (TLV:SCC) Might Have The Makings Of A Multi-Bagger

Simply Wall St · 4d ago

What are the early trends we should look for to identify a stock that could multiply in value over the long term? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. With that in mind, we've noticed some promising trends at Space-Communication (TLV:SCC) so let's look a bit deeper.

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What Is Return On Capital Employed (ROCE)?

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. Analysts use this formula to calculate it for Space-Communication:

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

0.16 = US$29m ÷ (US$597m - US$418m) (Based on the trailing twelve months to September 2025).

Therefore, Space-Communication has an ROCE of 16%. On its own, that's a standard return, however it's much better than the 11% generated by the Telecom industry.

Check out our latest analysis for Space-Communication

roce
TASE:SCC Return on Capital Employed January 8th 2026

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Space-Communication.

The Trend Of ROCE

Space-Communication has not disappointed in regards to ROCE growth. We found that the returns on capital employed over the last five years have risen by 800%. That's not bad because this tells for every dollar invested (capital employed), the company is increasing the amount earned from that dollar. Interestingly, the business may be becoming more efficient because it's applying 67% less capital than it was five years ago. If this trend continues, the business might be getting more efficient but it's shrinking in terms of total assets.

For the record though, there was a noticeable increase in the company's current liabilities over the period, so we would attribute some of the ROCE growth to that. Effectively this means that suppliers or short-term creditors are now funding 70% of the business, which is more than it was five years ago. Given it's pretty high ratio, we'd remind investors that having current liabilities at those levels can bring about some risks in certain businesses.

The Bottom Line On Space-Communication's ROCE

In a nutshell, we're pleased to see that Space-Communication has been able to generate higher returns from less capital. Investors may not be impressed by the favorable underlying trends yet because over the last five years the stock has only returned 12% to shareholders. So exploring more about this stock could uncover a good opportunity, if the valuation and other metrics stack up.

One final note, you should learn about the 5 warning signs we've spotted with Space-Communication (including 3 which are a bit unpleasant) .

While Space-Communication may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.