Applied Optoelectronics's Return on Invested Capital Overview

According to data from Benzinga Pro, during Q4, Applied Optoelectronics's AAOI reported sales totaled $54.41 million. Despite a 7.96% increase in earnings, the company posted a loss of $14.54 million. In Q3, Applied Optoelectronics brought in $53.27 million in sales but lost $15.80 million in earnings.

What Is Return On Invested Capital?

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 Q4, Applied Optoelectronics posted an ROIC of -3.57%.

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.

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 Q4, Applied Optoelectronics posted an ROIC of -3.57%.

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 Applied Optoelectronics, a negative ROIC ratio of -3.57% 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

Applied Optoelectronics reported Q4 earnings per share at $-0.2/share, which beat analyst predictions of $-0.22/share.

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