Looking Into Orthofix Medical's Return On Invested Capital

According to Benzinga Pro data, during Q1, Orthofix Medical OFIX posted sales of $106.42 million. Earnings were up 86.41%, but Orthofix Medical still reported an overall loss of $4.46 million. In Q4, Orthofix Medical brought in $125.06 million in sales but lost $32.81 million in earnings.

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, Orthofix Medical posted an ROIC of -2.56%.

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, Orthofix Medical posted an ROIC of -2.56%.

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 Orthofix Medical, a negative ROIC ratio of -2.56% 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

Orthofix Medical reported Q1 earnings per share at $-0.1/share, which did not meet analyst predictions of $0.09/share.

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