Return On Capital Employed Overview: PayPal Holdings

Looking at Q2, PayPal Holdings PYPL earned $951.00 million, a 138.94% increase from the preceding quarter. PayPal Holdings also posted a total of $5.26 billion in sales, a 13.92% increase since Q1. PayPal Holdings earned $398.00 million, and sales totaled $4.62 billion in Q1.

Why ROCE Is Significant

Changes in earnings and sales indicate shifts in PayPal Holdings’s Return on Capital Employed, a measure of yearly pre-tax profit relative to capital employed in a business. Generally, a higher ROCE suggests successful growth in a company and is a sign of higher earnings per share for shareholders in the future. In Q2, PayPal Holdings posted an ROCE of 0.05%.

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 PayPal Holdings 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 lead to higher returns and earnings per share growth.

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

Q2 Earnings Recap

PayPal Holdings reported Q2 earnings per share at $1.07/share, which beat analyst predictions of $0.86/share.

Date
ticker
name
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: EarningsFintechNews
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!
fintech-banner
Fintech Focus Newsletter

Your update on what’s going on in the Fintech space. Keep up-to-date with news, valuations, mergers, funding, and events. Sign up today!


Loading...