Looking into Prudential Financial's Return on Capital Employed

Pulled from Benzinga Pro data Prudential Financial PRU posted Q2 earnings of $2.77 billion, an increase from Q1 of 18.78%. Sales dropped to $13.10 billion, a 7.84% decrease between quarters. Prudential Financial earned $3.41 billion, and sales totaled $14.21 billion in Q1.

Why ROCE Is Significant

Changes in earnings and sales indicate shifts in Prudential Financial'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, Prudential Financial posted an ROCE of 0.04%.

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

Analyst Predictions

Prudential Financial reported Q2 earnings per share at $3.79/share, which beat analyst predictions of $3.02/share.