Accolade Insights: Return On Capital Employed

In Q1, Accolade ACCD posted sales of $59.53 million. Earnings were up 908.93%, but Accolade still reported an overall loss of $48.02 million. Accolade collected $59.23 million in revenue during Q4, but reported earnings showed a $4.76 million loss.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in Accolade'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 Q1, Accolade posted an ROCE of -0.11%.

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.

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.

For Accolade, the return on capital employed ratio shows the current amount of assets may not actually be helping the company achieve higher returns, a note many investors will take into account when making long-term financial decisions.

Q1 Earnings Insight

Accolade reported Q1 earnings per share at $-0.66/share, which did not meet analyst predictions of $-0.37/share.