Lamar Advertising Earnings Perspective: Return On Invested Capital

According to Benzinga Pro, during Q1, Lamar Advertising LAMR earned $92.15 million, a 25.27% increase from the preceding quarter. Lamar Advertising's sales decreased to $451.39 million, a 8.73% change since Q4. Lamar Advertising earned $123.31 million, and sales totaled $494.57 million in Q4.

What Is Return On Invested Capital?

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 Q1, Lamar Advertising posted an ROIC of 2.75%.

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 Lamar Advertising, the positive return on invested capital ratio of 2.75% 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.