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Return On Capital Employed Overview: FuelCell Energy

Benzinga Insights

During Q2, FuelCell Energy (NASDAQ: FCEL) brought in sales totaling $18.88 million. However, earnings decreased 63.34%, resulting in a loss of $14.72 million. FuelCell Energy collected $16.26 million in revenue during Q1, but reported earnings showed a $14.72 million loss.

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, FuelCell Energy posted an ROCE of -3.59%.

View more earnings on FCEL

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.

ROCE is an important metric for the comparison of similar companies. A relatively high ROCE shows FuelCell Energy is potentially operating at a higher level of efficiency than other companies in its industry. If the company is generating high profits with its current level of capital, some of that money can be reinvested in more capital which will lead to higher returns and earnings per share growth. In FuelCell Energy'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

FuelCell Energy reported earnings per share that matched analyst predictions of $-0.07/share.

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