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Looking Into CommScope Holding Co's Return On Capital Employed

Benzinga Insights
·2 mins read

In Q2, CommScope Holding Co (NASDAQ: COMM) posted sales of $2.10 billion. Earnings were up 512.58%, but CommScope Holding Co still reported an overall loss of $194.80 million. In Q1, CommScope Holding Co brought in $2.03 billion in sales but lost $31.80 million in earnings.

Why ROCE Is Significant

Return on Capital Employed is a measure of yearly pre-tax profit relative to capital employed in a business. Changes in earnings and sales indicate shifts in a company's ROCE. A higher ROCE is generally representative of successful growth in a company and is a sign of higher earnings per share for shareholders in the future. A low or negative ROCE suggests the opposite. In Q2, CommScope Holding Co posted an ROCE of -0.15%.

Keep in mind, while ROCE 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.

View more earnings on COMM

Return on Capital Employed is an important measurement of efficiency and a useful tool when comparing companies that operate in the same industry. A relatively high ROCE indicates a company may be generating profits that can be reinvested into more capital, leading to higher returns and growing EPS for shareholders.

In CommScope Holding Co's case, the ROCE ratio shows the amount of assets may not be helping the company achieve higher returns. Investors may take this into account before making any long-term financial decisions.

Q2 Earnings Recap

CommScope Holding Co reported Q2 earnings per share at $0.32/share, which beat analyst predictions of $0.19/share.

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