U.S. Markets closed

ROCE Insights For FreightCar America

  • Oops!
    Something went wrong.
    Please try again later.
·1 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

 

FreightCar America (NASDAQ:RAIL) reported Q4 sales of $60.59 million. Earnings fell to a loss of $9.21 million, resulting in a 77.72% decrease from last quarter. FreightCar America collected $25.20 million in revenue during Q3, but reported earnings showed a $41.34 million loss.

What Is ROCE?

Changes in earnings and sales indicate shifts in FreightCar 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, FreightCar America posted an ROCE of -0.21%.

View more earnings on RAIL

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.

ROCE is an important metric for the comparison of similar companies. A relatively high ROCE shows FreightCar America 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 FreightCar America'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.

Q4 Earnings Insight

FreightCar America reported Q4 earnings per share at $-0.07/share, which beat analyst predictions of $-0.67/share.

See more from Benzinga

© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.