Grocery Outlet Holding: Return On Capital Employed Insights

Grocery Outlet Holding GO posted Q1 earnings of $23.85 million, an increase from Q4 of 14.31%. Sales dropped to $752.47 million, a 6.74% decrease between quarters. In Q4, Grocery Outlet Holding earned $27.83 million, and total sales reached $806.82 million.

Why ROCE Is Significant

Changes in earnings and sales indicate shifts in Grocery Outlet Holding'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, Grocery Outlet Holding posted an ROCE of 0.03%.

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 Grocery Outlet Holding 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 Grocery Outlet Holding's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q1 Earnings Recap

Grocery Outlet Holding reported Q1 earnings per share at $0.23/share, which beat analyst predictions of $0.22/share.