Array Technologies: Return On Capital Employed Insights

Array Technologies ARRY posted a 682.72% decrease in earnings from Q4. Sales, however, increased by 36.2% over the previous quarter to $245.93 million. Despite the increase in sales this quarter, the decrease in earnings may suggest Array Technologies is not utilizing their capital as effectively as possible. In Q4, Array Technologies brought in $180.57 million in sales but lost $2.24 million in earnings.

What Is ROCE?

Changes in earnings and sales indicate shifts in Array 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, Array Technologies posted an ROCE of -0.19%.

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 Array Technologies's case, the ROCE ratio shows the amount of assets may not be helping the company achieve higher returns. Investors may take this into account before making any long-term financial decisions.

Q1 Earnings Insight

Array Technologies reported Q1 earnings per share at $0.19/share, which did not meet analyst predictions of $0.2/share.