Looking Into Science Applications Intl's Return On Capital Employed

Science Applications Intl SAIC posted Q4 earnings of $102.00 million, an increase from Q3 of 7.27%. Sales dropped to $1.72 billion, a 5.56% decrease between quarters. In Q3, Science Applications Intl earned $110.00 million, and total sales reached $1.82 billion.

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 Q4, Science Applications Intl posted an ROCE of 0.07%.

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 Science Applications Intl 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.

In Science Applications Intl's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q4 Earnings Insight

Science Applications Intl reported Q4 earnings per share at $1.67/share, which beat analyst predictions of $1.45/share.