Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Speaking of which, we noticed some great changes in DXC Technology’s (NYSE:DXC) returns on capital, so let’s have a look.
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 DXC Technology:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)
0.099 = US$848m ÷ (US$14b – US$5.0b) (Based on the trailing twelve months to September 2025).
So, DXC Technology has an ROCE of 9.9%. On its own that’s a low return on capital but it’s in line with the industry’s average returns of 9.8%.
View our latest analysis for DXC Technology
NYSE:DXC Return on Capital Employed December 27th 2025
In the above chart we have measured DXC Technology’s prior ROCE against its prior performance, but the future is arguably more important. If you’d like to see what analysts are forecasting going forward, you should check out our free analyst report for DXC Technology .
DXC Technology has not disappointed in regards to ROCE growth. We found that the returns on capital employed over the last five years have risen by 71%. That’s a very favorable trend because this means that the company is earning more per dollar of capital that’s being employed. In regards to capital employed, DXC Technology appears to been achieving more with less, since the business is using 50% less capital to run its operation. A business that’s shrinking its asset base like this isn’t usually typical of a soon to be multi-bagger company.
In a nutshell, we’re pleased to see that DXC Technology has been able to generate higher returns from less capital. Given the stock has declined 41% in the last five years, this could be a good investment if the valuation and other metrics are also appealing. So researching this company further and determining whether or not these trends will continue seems justified.