Gorman-Rupp: Return On Capital Employed Insights

Looking at Q1, Gorman-Rupp GRC earned $8.97 million, a 6.37% increase from the preceding quarter. Gorman-Rupp also posted a total of $89.03 million in sales, a 7.91% increase since Q4. In Q4, Gorman-Rupp earned $8.44 million, and total sales reached $82.50 million.

What Is ROCE?

Return on Capital Employed is a measure of yearly pre-tax profit relative to capital employed by a business. Changes in earnings and sales indicate shifts in a company's ROCE. A higher ROCE 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 ROCE suggests the opposite. In Q1, Gorman-Rupp posted an ROCE of 0.03%.

Keep in mind, while ROCE 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 Capital Employed is an important measurement of efficiency and a useful tool when comparing companies that operate in the same industry. A relatively high ROCE indicates a company may be generating profits that can be reinvested into more capital, leading to higher returns and growing EPS for shareholders.

In Gorman-Rupp's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q1 Earnings Recap

Gorman-Rupp reported Q1 earnings per share at $0.28/share, which did not meet analyst predictions of $0.28/share.