Vonage Hldgs's Return on Invested Capital Insights

According to Benzinga Pro data, during Q1, Vonage Hldgs VG posted sales of $358.83 million. Earnings were up 22.7%, but Vonage Hldgs still reported an overall loss of $17.12 million. Vonage Hldgs collected $366.31 million in revenue during Q4, but reported earnings showed a $22.15 million loss.

What Is ROIC?

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, Vonage Hldgs posted an ROIC of -1.8%.

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, Vonage Hldgs posted an ROIC of -1.8%.

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 Vonage Hldgs, a negative ROIC ratio of -1.8% 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

Vonage Hldgs reported Q1 earnings per share at $-0.02/share, which did not meet analyst predictions of $0.04/share.

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