Looking Into Church & Dwight Co's Return On Invested Capital

Pulled from Benzinga Pro data, Church & Dwight Co CHD posted Q1 earnings of $204.40 million, an increase from Q4 of 29.29%. Sales dropped to $1.30 billion, a 5.26% decrease between quarters. In Q4, Church & Dwight Co earned $158.10 million, whereas sales reached $1.37 billion.

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 Q1, Church & Dwight Co posted an ROIC of 4.83%.

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 Church & Dwight Co, the positive return on invested capital ratio of 4.83% 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.