Reata Pharmaceuticals's Return on Invested Capital Insights

Benzinga Pro data, Reata Pharmaceuticals RETA reported Q4 sales of $934.00 thousand. Earnings fell to a loss of $85.39 million, resulting in a 18.84% decrease from last quarter. Reata Pharmaceuticals collected $7.39 million in revenue during Q3, but reported earnings showed a $71.85 million loss.

Why Is ROIC Significant?

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 Q4, Reata Pharmaceuticals posted an ROIC of -22.7%.

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 Q4, Reata Pharmaceuticals posted an ROIC of -22.7%.

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 Reata Pharmaceuticals, a negative ROIC ratio of -22.7% 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.

Analyst Predictions

Reata Pharmaceuticals reported Q4 earnings per share at $-1.59/share, which beat analyst predictions of $-2.31/share.

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