Return on Capital Employed Insights for Two Harbors Investment

Pulled from Benzinga Pro data Two Harbors Investment TWO posted Q2 earnings of $24.61 million, an increase from Q1 of 38.43%. Sales dropped to $19.04 million, a 42.98% decrease between quarters. Two Harbors Investment earned $39.98 million, and sales totaled $33.38 million in Q1.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in Two Harbors Investment'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, Two Harbors Investment 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.

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.

For Two Harbors Investment, 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.

Upcoming Earnings Estimate

Two Harbors Investment reported Q2 earnings per share at $0.19/share, which did not meet analyst predictions of $0.21/share.