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During Q3, Bed Bath & Beyond (NASDAQ:BBBY) brought in sales totaling $2.62 billion. However, earnings decreased 111.03%, resulting in a loss of $8.94 million. In Q2, Bed Bath & Beyond earned $81.02 million, and total sales reached $2.69 billion.
What Is ROCE?
Changes in earnings and sales indicate shifts in Bed Bath & Beyond'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 Q3, Bed Bath & Beyond posted an ROCE of -0.01%.
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.
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 Bed Bath & Beyond, the return on capital employed ratio shows the current amount of assets may not actually be helping the company achieve higher returns, a note many investors will take into account when making long-term financial decisions.
Q3 Earnings Insight
Bed Bath & Beyond reported Q3 earnings per share at $0.08/share, which did not meet analyst predictions of $0.19/share.
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