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ROCE Insights For Magnolia Oil & Gas

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Looking at Q4, Magnolia Oil & Gas (NYSE:MGY) earned $42.66 million, a 94.45% increase from the preceding quarter. Magnolia Oil & Gas also posted a total of $149.24 million in sales, a 23.27% increase since Q3. In Q3, Magnolia Oil & Gas earned $21.94 million, and total sales reached $121.07 million.

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, Magnolia Oil & Gas posted an ROCE of 0.05%.

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.

View more earnings on MGY

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.

In Magnolia Oil & Gas's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q4 Earnings Recap

Magnolia Oil & Gas reported Q4 earnings per share at $0.15/share, which beat analyst predictions of $0.1/share.

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