In the fourth quarter, GMS (NYSE:GMS) earned $58.31 million, up 69.99 percent from the previous quarter. GMS also reported sales of $932.20 million, up 24.1 percent from the previous quarter. GMS earned $34.30 million in the third quarter, with total sales of $751.19 million.
What Is ROCE and How Does It Work?
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. GMS had a ROCE of 0.07 percent in the fourth 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 GMS, the positive ROCE ratio will be a factor to consider when making long-term financial decisions.
GMS announced earnings per share of $1.07 per share in the fourth quarter, beating analyst expectations of $0.82 per share./n
