Looking Into Cabot Oil & Gas's Return On Capital Employed

Looking at Q1, Cabot Oil & Gas COG earned $188.60 million, a 57.67% increase from the preceding quarter. Cabot Oil & Gas also posted a total of $459.68 million in sales, a 0.64% increase since Q4. In Q4, Cabot Oil & Gas earned $119.62 million, and total sales reached $456.78 million.

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, Cabot Oil & Gas posted an ROCE of 0.08%.

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.

Return on Capital Employed is an important measurement of efficiency and a useful tool when comparing companies that operate in the same industry. A relatively high ROCE indicates a company may be generating profits that can be reinvested into more capital, leading to higher returns and growing EPS for shareholders.

In Cabot Oil & Gas's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q1 Earnings Insight

Cabot Oil & Gas reported Q1 earnings per share at $0.38/share, which beat analyst predictions of $0.35/share.