ROCE Insights For Blue Bird

Blue Bird BLBD posted a 609.91% decrease in earnings from Q1. Sales, however, increased by 26.27% over the previous quarter to $164.70 million. Despite the increase in sales this quarter, the decrease in earnings may suggest Blue Bird is not utilizing their capital as effectively as possible. In Q1, Blue Bird brought in $130.43 million in sales but lost $222.00 thousand in earnings.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in Blue Bird's Return on Capital Employed, a measure of yearly pre-tax profit relative to capital employed by a business. Generally, a higher ROCE suggests successful growth of a company and is a sign of higher earnings per share in the future. In Q2, Blue Bird posted an ROCE of -0.02%.

It is important to keep in mind ROCE evaluates past performance and is not used as a predictive tool. It is a good measure of a company's recent performance, but several factors could affect earnings and sales in the near future.

ROCE is an important metric for the comparison of similar companies. A relatively high ROCE shows Blue Bird is potentially operating at a higher level of efficiency than other companies in its industry. If the company is generating high profits with its current level of capital, some of that money can be reinvested in more capital which will generally lead to higher returns and earnings per share growth.

For Blue Bird, the return on capital employed ratio shows the current amount of assets may not actually be helping the company achieve higher returns, a note many investors will take into account when making long-term financial decisions.

Q2 Earnings Recap

Blue Bird reported Q2 earnings per share at $0.05/share, which did not meet analyst predictions of $0.08/share.