ROCE Insights For CommScope Holding Co

CommScope Holding Co COMM posted Q1 earnings of $8.90 million, an increase from Q4 of 92.52%. Sales dropped to $2.07 billion, a 2.81% decrease between quarters. In Q4, CommScope Holding Co earned $119.00 million, and total sales reached $2.13 billion.

Why ROCE Is Significant

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 Q1, CommScope Holding Co posted an ROCE of 0.01%.

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 CommScope Holding Co 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 CommScope Holding Co's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q1 Earnings Insight

CommScope Holding Co reported Q1 earnings per share at $0.36/share, which beat analyst predictions of $0.29/share.