Return On Capital Employed Overview: United Airlines Holdings

In Q2, United Airlines Holdings UAL saw a decline in both earnings and sales. Earnings decreased by 99.09% to $63.00 million, and sales dropped by 81.51% to $1.48 billion. United Airlines Holdings reached earnings of $6.91 billion and sales of $7.98 billion in Q1.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in United Airlines Holdings’s Return on Capital Employed, a measure of yearly pre-tax profit relative to capital employed in a business. Generally, a higher ROCE suggests successful growth in a company and is a sign of higher earnings per share for shareholders in the future. In Q2, United Airlines Holdings posted an ROCE of -0.58%.

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.

ROCE is an important metric for the comparison of similar companies. A relatively high ROCE shows United Airlines Holdings 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 lead to higher returns and earnings per share growth.

For United Airlines Holdings, the return on capital employed ratio shows the current amount of assets may not actually be helping the company achieve higher returns, a note many investors will take into account when making long-term financial decisions.

Q2 Earnings

United Airlines reported Q2 earnings per share at $-9.31/share against analyst predictions of $-9.02/share.