Western Midstream: Return On Capital Employed Insights

Western Midstream WES showed a loss in earnings since Q4, totaling $240.75 million. Sales, on the other hand, increased by 4.25% to $674.97 million during Q1. Western Midstream reached earnings of $310.71 million and sales of $647.48 million in Q4.

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, Western Midstream posted an ROCE of 0.08%.

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

Q1 Earnings Insight

Western Midstream reported Q1 earnings per share at $0.44/share, which did not meet analyst predictions of $0.54/share.