SiteOne Landscape Supply Earnings Perspective: Return On Invested Capital

Pulled from Benzinga Pro data, SiteOne Landscape Supply SITE posted Q3 earnings of $103.40 million, an increase from Q2 of 37.18%. Sales dropped to $936.40 million, a 13.62% decrease between quarters. SiteOne Landscape Supply reached earnings of $164.60 million and sales of $1.08 billion in Q2.

What Is ROIC?

Return on Invested Capital is a measure of yearly pre-tax profit relative to capital invested by a business. Changes in earnings and sales indicate shifts in a company's ROIC. A higher ROIC 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 ROIC suggests the opposite. In Q3, SiteOne Landscape Supply posted an ROIC of 13.07%.

Keep in mind, while ROIC 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.

Earnings data without context is not clear and can difficult to base trading decisions on. Return on Invested Capital (ROIC) helps to filter signal from noise by measuring yearly pre-tax profit relative to invested capital by a business. Generally, a higher ROIC suggests successful growth of a company and is a sign of higher earnings per share in the future. In Q3, SiteOne Landscape Supply posted an ROIC of 13.07%.

It is important to keep in mind that ROIC evaluates past performance and is not used as a predictive tool. It is a good measure of a company's recent performance, but does not account for factors that could affect earnings and sales in the near future.

For SiteOne Landscape Supply, the positive return on invested capital ratio of 13.07% suggests that management is allocating their capital effectively. Effective capital allocation is a positive indicator that a company will achieve more durable success and favorable long-term returns.

Upcoming Earnings Estimate

SiteOne Landscape Supply reported Q3 earnings per share at $1.74/share, which beat analyst predictions of $1.25/share.