According to Benzinga Pro data Gran Tierra Energy (AMEX:GTE) posted a 77.42% decrease in earnings from Q4. Sales, however, increased by 19.33% over the previous quarter to $174.57 million. Despite the increase in sales this quarter, the decrease in earnings may suggest Gran Tierra Energy is not utilizing their capital as effectively as possible. Gran Tierra Energy reached earnings of $62.52 million and sales of $146.29 million in Q4.
Why Is ROIC Significant?
Return on Invested Capital is a measure of yearly pre-tax profit relative to capital invested by a business. Changes in earnings and sales indicate shifts in a company's ROIC. A higher ROIC is generally representative of successful growth of a company and is a sign of higher earnings per share in the future. A low or negative ROIC suggests the opposite. In Q1, Gran Tierra Energy posted an ROIC of 9.23%.
Keep in mind, while ROIC is a good measure of a company's recent performance, it is not a highly reliable predictor of a company's earnings or sales in the near future.
Return on Invested Capital is a measure of yearly pre-tax profit relative to capital invested by a business. Changes in earnings and sales indicate shifts in a company's ROIC. A higher ROIC is generally representative of successful growth of a company and is a sign of higher earnings per share in the future. A low or negative ROIC suggests the opposite. In Q1, Gran Tierra Energy posted an ROIC of 9.23%.
Keep in mind, while ROIC is a good measure of a company's recent performance, it is not a highly reliable predictor of a company's earnings or sales in the near future.
For Gran Tierra Energy, the positive return on invested capital ratio of 9.23% suggests that management is allocating their capital effectively. Effective capital allocation is a positive indicator that a company will achieve more durable success and favorable long-term returns.
Analyst Predictions
Gran Tierra Energy reported Q1 earnings per share at $0.04/share, which did not meet analyst predictions of $0.1/share.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
