Looking into McCormick & Co's Return on Capital Employed

Pulled from Benzinga Pro data McCormick & Co MKC showed a loss in earnings since Q1, totaling $244.30 million. Sales, on the other hand, increased by 5.1% to $1.56 billion during Q2. McCormick & Co reached earnings of $255.10 million and sales of $1.48 billion in Q1.

What Is Return On Capital Employed?

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 Q2, McCormick & Co posted an ROCE of 0.06%.

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