Looking into Coda Octopus Group's Return on Capital Employed

After pulling data from Benzinga Pro it seems like during Q2, Coda Octopus Group CODA earned $1.32 million, a 44.2% increase from the preceding quarter. Coda Octopus Group also posted a total of $5.37 million in sales, a 6.4% increase since Q1. Coda Octopus Group earned $918.42 thousand, and sales totaled $5.05 million in Q1.

Why ROCE Is Significant

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 Q2, Coda Octopus Group 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.

ROCE is an important metric for the comparison of similar companies. A relatively high ROCE shows Coda Octopus Group 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 Coda Octopus Group, the return on capital employed ratio shows the number of assets can actually help the company achieve higher returns, an important note investors will take into account when gauging the payoff from long-term financing strategies.

Analyst Predictions

Coda Octopus Group reported Q2 earnings per share at $0.2/share, which beat analyst predictions of $0.05/share.