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Looking Into Extended Stay America's Return On Capital Employed

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  • STAY

Looking at Q4, Extended Stay America (NASDAQ:STAY) earned $31.96 million, a 43.42% increase from the preceding quarter. Extended Stay America's sales decreased to $259.29 million, a 9.3% change since Q3. Extended Stay America earned $56.48 million, and sales totaled $285.89 million in Q3.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in Extended Stay America's Return on Capital Employed, a measure of yearly pre-tax profit relative to capital employed by a business. Generally, a higher ROCE suggests successful growth of a company and is a sign of higher earnings per share in the future. In Q4, Extended Stay America posted an ROCE of 0.03%.

It is important to keep in mind ROCE evaluates past performance and is not used as a predictive tool. It is a good measure of a company's recent performance, but several factors could affect earnings and sales in the near future.

View more earnings on STAY

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.

For Extended Stay America, the return on capital employed ratio shows the number of assets can actually help the company achieve higher returns, an important note investors will take into account when gauging the payoff from long-term financing strategies.

Q4 Earnings Insight

Extended Stay America reported Q4 earnings per share at $0.16/share, which beat analyst predictions of $0.02/share.

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