Return on Capital Employed Overview: Dollar General

After pulling data from Benzinga Pro it seems like during Q1, Dollar General DG earned $908.85 million, a 4.2% increase from the preceding quarter. Dollar General's sales decreased to $8.40 billion, a 0.17% change since Q4. In Q4, Dollar General brought in $8.41 billion in sales but only earned $872.22 million.

What Is ROCE?

Changes in earnings and sales indicate shifts in Dollar General's Return on Capital Employed, a measure of yearly pre-tax profit relative to capital employed by a business. Generally, a higher ROCE suggests successful growth of a company and is a sign of higher earnings per share in the future. In Q1, Dollar General posted an ROCE of 0.15%.

It is important to keep in mind ROCE evaluates past performance and is not used as a predictive tool. It is a good measure of a company's recent performance, but several factors could affect earnings and sales in the near future.

ROCE is an important metric for the comparison of similar companies. A relatively high ROCE shows Dollar General 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 Dollar General's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Upcoming Earnings Estimate

Dollar General reported Q1 earnings per share at $2.82/share, which beat analyst predictions of $2.19/share.