Return on Capital Employed Overview: Viper Energy Partners

After pulling data from Benzinga Pro it seems like during Q2, Viper Energy Partners VNOM earned $79.86 million, a 26.32% increase from the preceding quarter. Viper Energy Partners also posted a total of $114.15 million in sales, a 17.71% increase since Q1. In Q1, Viper Energy Partners brought in $96.98 million in sales but only earned $63.22 million.

What Is ROCE?

Changes in earnings and sales indicate shifts in Viper Energy Partners'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, Viper Energy Partners posted an ROCE of 0.04%.

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 Viper Energy Partners 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 Viper Energy Partners's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Analyst Predictions

Viper Energy Partners reported Q2 earnings per share at $0.09/share, which did not meet analyst predictions of $0.09/share.