Timken's Return on Invested Capital Overview

According to Benzinga Pro, during Q1, Timken TKR earned $121.90 million, a 82.76% increase from the preceding quarter. Timken also posted a total of $1.12 billion in sales, a 11.72% increase since Q4. Timken earned $66.70 million, and sales totaled $1.01 billion in Q4.

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 Q1, Timken posted an ROIC of 4.27%.

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 Q1, Timken posted an ROIC of 4.27%.

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 Timken, the positive return on invested capital ratio of 4.27% 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

Timken reported Q1 earnings per share at $1.61/share, which beat analyst predictions of $1.16/share.

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