Return on Capital Employed Overview: Global Payments

After pulling data from Benzinga Pro it seems like during Q2, Global Payments GPN earned $362.56 million, a 31.72% increase from the preceding quarter. Global Payments also posted a total of $1.94 billion in sales, a 7.12% increase since Q1. Global Payments earned $275.26 million, and sales totaled $1.81 billion in Q1.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in Global Payments'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 Q2, Global Payments posted an ROCE of 0.01%.

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 Global Payments 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.

For Global Payments, the return on capital employed ratio shows the number of assets can actually help the company achieve higher returns, an important note investors will take into account when gauging the payoff from long-term financing strategies.

Analyst Predictions

Global Payments reported Q2 earnings per share at $2.04/share, which beat analyst predictions of $1.89/share.