ROCE Insights For Advanced Energy Indus

Looking at Q1, Advanced Energy Indus AEIS earned $44.18 million, a 20.8% increase from the preceding quarter. Advanced Energy Indus's sales decreased to $351.62 million, a 5.22% change since Q4. Advanced Energy Indus earned $55.78 million, and sales totaled $370.97 million in Q4.

Why ROCE Is Significant

Return on Capital Employed is a measure of yearly pre-tax profit relative to capital employed by a business. Changes in earnings and sales indicate shifts in a company's ROCE. A higher ROCE 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 ROCE suggests the opposite. In Q1, Advanced Energy Indus posted an ROCE of 0.05%.

Keep in mind, while ROCE 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.

ROCE is an important metric for the comparison of similar companies. A relatively high ROCE shows Advanced Energy Indus 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 capital, some of that money can be reinvested in more capital which will generally lead to higher returns and earnings per share growth.

In Advanced Energy Indus's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q1 Earnings Recap

Advanced Energy Indus reported Q1 earnings per share at $1.29/share, which beat analyst predictions of $1.26/share.