Return on Capital Employed Insights for CommScope Holding Co

After pulling data from Benzinga Pro it seems like during Q2, CommScope Holding Co COMM brought in sales totaling $2.19 billion. However, earnings decreased 306.74%, resulting in a loss of $18.40 million. In Q1, CommScope Holding Co earned $8.90 million and total sales reached $2.07 billion.

What Is Return On Capital Employed?

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 Q2, CommScope Holding Co posted an ROCE of -0.02%.

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.

ROCE is an important metric for the comparison of similar companies. A relatively high ROCE shows CommScope Holding Co 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 CommScope Holding Co, the return on capital employed ratio shows the current amount of assets may not actually be helping the company achieve higher returns, a note many investors will take into account when making long-term financial decisions.

Upcoming Earnings Estimate

CommScope Holding Co reported Q2 earnings per share at $0.43/share, which did not meet analyst predictions of $0.44/share.