Return on Capital Employed Overview: MSC Industrial Direct Co

After pulling data from Benzinga Pro it seems like during Q3, MSC Industrial Direct Co MSM earned $128.63 million, a 359.03% increase from the preceding quarter. MSC Industrial Direct Co also posted a total of $866.29 million in sales, a 11.93% increase since Q2. MSC Industrial Direct Co earned $28.02 million, and sales totaled $774.00 million in Q2.

Why ROCE Is Significant

Changes in earnings and sales indicate shifts in MSC Industrial Direct Co'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 Q3, MSC Industrial Direct Co posted an ROCE of 0.11%.

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

Upcoming Earnings Estimate

MSC Industrial Direct Co reported Q3 earnings per share at $1.42/share, which beat analyst predictions of $1.37/share.