Asbury Automotive Group's Return on Invested Capital Insights

According to Benzinga Pro data Asbury Automotive Group ABG posted a 15.27% decrease in earnings from Q1. Sales, however, increased by 0.97% over the previous quarter to $3.95 billion. Despite the increase in sales this quarter, the decrease in earnings may suggest Asbury Automotive Group is not utilizing their capital as effectively as possible. Asbury Automotive Group reached earnings of $237.70 million and sales of $3.91 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, Asbury Automotive Group posted an ROIC of 5.74%.

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, Asbury Automotive Group posted an ROIC of 5.74%.

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 Asbury Automotive Group, the positive return on invested capital ratio of 5.74% 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.

Analyst Predictions

Asbury Automotive Group reported Q2 earnings per share at $10.04/share, which beat analyst predictions of $8.82/share.

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