Acuity Brands (NYSE:AYI) earned $118.10 million in the third quarter, up 29.78 percent from the previous quarter. Acuity Brands also reported sales of $899.70 million, up 15.85 percent from the previous quarter. In the second quarter, Acuity Brands made $91.00 million on sales of $776.60 million.
Why Is ROCE Important?
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. Acuity Brands had a 0.06 percent ROCE in the third 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 Acuity Brands illustrates that having more assets can actually help the company generate higher returns, which is something investors will consider when evaluating the payout from long-term financing plans.
Insights into Q3 Earnings
Acuity Brands announced $2.77 earnings per share in the third quarter, beating consensus expectations of $2.27./n
