Intel (NASDAQ: INTC) saw a drop in both earnings and sales after Q2. Earnings dropped to $5.66 billion, an 82.92% decrease from the previous quarter. Sales fell to $19.73 billion, down 0.5% from the previous quarter. In Q1, Intel earned $33.15 billion and total sales reached $19.83 billion.
What Is Return On Capital Employed?
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, Intel posted an ROCE of 2.69%.
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.
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 Intel's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.
Q2 Earnings
Intel reported Q2 earnings per share at $1.23/share against analyst predictions of $1.1/share.
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July 24, 2020 at 04:29PM
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ROCE Insights For Intel - Yahoo Finance
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