Looking into WD-40's Return on Capital Employed

After pulling data from Benzinga Pro it seems like during Q3, WD-40 WDFC earned $27.32 million, a 32.27% increase from the preceding quarter. WD-40 also posted a total of $136.41 million in sales, a 21.89% increase since Q2. WD-40 earned $20.66 million, and sales totaled $111.91 million in Q2.

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 Q3, WD-40 posted an ROCE of 0.13%.

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 WD-40's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Upcoming Earnings Estimate

WD-40 reported Q3 earnings per share at $1.52/share, which beat analyst predictions of $1.15/share.