Looking Into S&W Seed's Return On Invested Capital

S&W Seed SANW brought in sales totaling $12.63 million during Q2 according to data provided by Benzinga Pro. However, earnings decreased 52.5%, resulting in a loss of $9.78 million. In Q1, S&W Seed brought in $15.53 million in sales but lost $6.41 million in earnings.

What Is Return On Invested Capital?

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 Q2, S&W Seed posted an ROIC of -4.93%.

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.

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 Q2, S&W Seed posted an ROIC of -4.93%.

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.

For S&W Seed, a negative ROIC ratio of -4.93% suggests that management may not be effectively allocating their capital. Effective capital allocation is a positive indicator that a company will achieve more durable success and favorable long-term returns; poor capital allocation can be a leech on the performance of a company over time.

Upcoming Earnings Estimate

S&W Seed reported Q2 earnings per share at $-0.26/share, which did not meet analyst predictions of $-0.16/share.

This article was generated by Benzinga's automated content engine and reviewed by an editor.