L Brands (NYSE:LB) reported $572.00 million in first-quarter earnings, up 55.07 percent from the previous quarter. Sales fell 37.24 percent from the previous quarter to $3.02 billion. L Brands earned $1.27 billion in the fourth quarter, with total sales of $4.82 billion.
What is the definition of Return On Capital Employed (ROCE)?
Return on Capital Employed (ROCE) is a metric that compares a company’s annual pre-tax profit to the capital it has invested. Earnings and sales fluctuations imply changes in a company’s ROCE. A higher ROCE is indicative of a company’s successful growth and, as a result, of better earnings per share in the future. A low or negative ROCE indicates the inverse. L Brands had a -1.07 percent ROCE in the first quarter.
Keep in mind that, while ROCE is a solid indicator of a company’s previous performance, it isn’t a very good prediction of earnings or sales in the near future.
Return on Capital Employed (ROCE) is a key indicator of efficiency and a useful metric for comparing businesses in the same industry. A high ROCE shows that a company is making profits that can be reinvested into new capital, resulting in higher returns and EPS growth for shareholders.
The return on capital employed ratio for L Brands indicates that the existing level of assets may not be assisting the company in achieving higher returns, which many investors may consider when making long-term financial decisions.
Insights into Q1 Earnings
L Brands reported $1.25 per share earnings per share in the first quarter, beating analyst expectations of $0.98 per share./n
