Return on Capital Employed Insights for Autoliv

After pulling data from Benzinga Pro it seems like during Q2, Autoliv ALV earned $163.00 million, a 30.93% increase from the preceding quarter. Autoliv's sales decreased to $2.02 billion, a 9.81% change since Q1. In Q1, Autoliv earned $236.00 million, and total sales reached $2.24 billion.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in Autoliv'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 Q2, Autoliv posted an ROCE of 0.06%.

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 Autoliv 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.

For Autoliv, the return on capital employed ratio shows the number of assets can actually help the company achieve higher returns, an important note investors will take into account when gauging the payoff from long-term financing strategies.

Upcoming Earnings Estimate

Autoliv reported Q2 earnings per share at $1.2/share, which did not meet analyst predictions of $1.43/share.