PARTS iD Earnings Perspective: Return On Invested Capital

PARTS iD ID brought in sales totaling $79.89 million during Q3 according to data provided by Benzinga Pro. However, earnings decreased 597.0%, resulting in a loss of $6.27 million. In Q2, PARTS iD brought in $104.26 million in sales but lost $899 thousand in earnings.

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 Q3, PARTS iD posted an ROIC of 13.58%.

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.

ROIC is a powerful metric for comparing the effectiveness of capital allocation for similar companies. A relatively high ROIC shows PARTS iD is potentially operating at a higher level of efficiency than other companies in its industry. If the company is generating high profits with its current level of invested capital, some of that money can be reinvested in more capital which will generally lead to higher returns and, ultimately, earnings per share (EPS) growth.

For PARTS iD, the positive return on invested capital ratio of 13.58% 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

PARTS iD reported Q3 earnings per share at $-0.18/share, which did not meet analyst predictions of $-0.08/share.

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