Looking Into Travel+Leisure's Return On Capital Employed

Travel+Leisure TNL posted Q1 earnings of $87.00 million, an increase from Q4 of 2.35%. Sales dropped to $628.00 million, a 2.64% decrease between quarters. In Q4, Travel+Leisure brought in $645.00 million in sales but only earned $85.00 million.

Why ROCE Is Significant

Changes in earnings and sales indicate shifts in Travel+Leisure'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, Travel+Leisure posted an ROCE of -0.09%.

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 Travel+Leisure'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

Travel+Leisure reported Q1 earnings per share at $0.39/share, which beat analyst predictions of $0.2/share.