Constellation Brands (NYSE:STZ) reported an 86.1% drop in earnings from the previous quarter. Sales, on the other hand, climbed by 3.79 percent to $2.03 billion over the previous quarter. Despite the growth in sales this quarter, the drop in earnings could indicate that Constellation Brands is not making the most use of its money. Constellation Brands made $540.40 million in the fourth quarter, with total sales of $1.95 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. Constellation Brands had a 0.01 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.
In the case of Constellation Brands, the favorable ROCE ratio will be a factor to consider when making long-term financial decisions.
Insights into Q1 Earnings
Constellation Brands reported $2.33 per share earnings per share in the first quarter, beating analyst expectations of $2.32 per share./n
