Ormat Technologies Insights: Return On Capital Employed

Ormat Technologies ORA posted Q1 earnings of $49.89 million, an increase from Q4 of 6.21%. Sales dropped to $166.35 million, a 7.26% decrease between quarters. Ormat Technologies earned $53.20 million, and sales totaled $179.38 million in Q4.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in Ormat Technologies'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 Q1, Ormat Technologies posted an ROCE of 0.03%.

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.

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

Q1 Earnings Recap

Ormat Technologies reported Q1 earnings per share at $0.42/share, which beat analyst predictions of $0.37/share.