Wendy's's Return on Invested Capital Overview

According to Benzinga Pro, during Q2, Wendy's WEN earned $95.98 million, a 16.19% increase from the preceding quarter. Wendy's also posted a total of $493.34 million in sales, a 7.2% increase since Q1. In Q1, Wendy's earned $82.61 million, and total sales reached $460.20 million.

What Is ROIC?

Return on Invested Capital is a measure of yearly pre-tax profit relative to capital invested by a business. Changes in earnings and sales indicate shifts in a company's ROIC. A higher ROIC 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 ROIC suggests the opposite. In Q2, Wendy's posted an ROIC of 3.18%.

Keep in mind, while ROIC 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.

For Wendy's, the positive return on invested capital ratio of 3.18% suggests that management is allocating their capital effectively. Effective capital allocation is a positive indicator that a company will achieve more durable success and favorable long-term returns.