Looking Into Gap's Return On Invested Capital

According to Benzinga Pro, during Q2, Gap GPS earned $409.00 million, a 70.42% increase from the preceding quarter. Gap also posted a total of $4.21 billion in sales, a 5.51% increase since Q1. Gap earned $240.00 million, and sales totaled $3.99 billion in Q1.

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, Gap posted an ROIC of 7.81%.

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.

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, Gap posted an ROIC of 7.81%.

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 Gap, the positive return on invested capital ratio of 7.81% 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.

Upcoming Earnings Estimate

Gap reported Q2 earnings per share at $0.7/share, which beat analyst predictions of $0.43/share.

This article was generated by Benzinga's automated content engine and reviewed by an editor.