Pulled from Benzinga Pro data, Methode Electronics (NYSE:MEI) posted Q3 earnings of $29.40 million, an increase from Q2 of 6.91%. Sales dropped to $291.60 million, a 1.32% decrease between quarters. In Q2, Methode Electronics earned $27.50 million, whereas sales reached $295.50 million.
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 Q3, Methode Electronics posted an ROIC of 2.63%.
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 Q3, Methode Electronics posted an ROIC of 2.63%.
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 Methode Electronics, the positive return on invested capital ratio of 2.63% 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.
Upcoming Earnings Estimate
Methode Electronics reported Q3 earnings per share at $0.79/share, which beat analyst predictions of $0.72/share.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
