Globus Medical's Return on Invested Capital Insights

Pulled from Benzinga Pro data, Globus Medical GMED showed a loss in earnings since Q3, totaling $15.11 million. Sales, on the other hand, increased by 8.84% to $250.02 million during Q4. Globus Medical reached earnings of $47.21 million and sales of $229.72 million in Q3.

What Is ROIC?

Earnings data without context is not clear and can difficult to base trading decisions on. Return on Invested Capital (ROIC) helps to filter signal from noise by measuring yearly pre-tax profit relative to invested capital by a business. Generally, a higher ROIC suggests successful growth of a company and is a sign of higher earnings per share in the future. In Q4, Globus Medical posted an ROIC of 3.16%.

It is important to keep in mind that ROIC evaluates past performance and is not used as a predictive tool. It is a good measure of a company's recent performance, but does not account for factors that could affect earnings and sales in the near future.

For Globus Medical, the positive return on invested capital ratio of 3.16% 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.