ROCE Insights For Advanced Micro Devices
Looking at Q4, Advanced Micro Devices (NASDAQ:AMD) earned $570.00 million, a 26.95% increase from the preceding quarter. Advanced Micro Devices also posted a total of $3.24 billion in sales, a 15.82% increase since Q3. Advanced Micro Devices earned $449.00 million, and sales totaled $2.80 billion in Q3.
What Is ROCE?
Return on Capital Employed is a measure of yearly pre-tax profit relative to capital employed by a business. Changes in earnings and sales indicate shifts in a company's ROCE. A higher ROCE is generally representative of successful growth of a company and is a sign of higher earnings per share in the future. A low or negative ROCE suggests the opposite. In Q4, Advanced Micro Devices posted an ROCE of 0.1%.
See also: Best Biotech Stocks Right Now
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 Advanced Micro Devices 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 generally lead to higher returns and earnings per share growth.
In Advanced Micro Devices's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.
Q4 Earnings Insight
Advanced Micro Devices reported Q4 earnings per share at $0.52/share, which beat analyst predictions of $0.47/share.
See more from Benzinga
10 Information Technology Stocks With Unusual Options Alerts In Today's Session
10 Information Technology Stocks Showing Unusual Options Activity In Today's Session
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
