Market Overview

Return On Capital Employed Overview: Oasis Petroleum


During Q2, Oasis Petroleum (NASDAQ: OAS) brought in sales totaling $166.35 million. However, earnings decreased 99.79%, resulting in a loss of $10.18 million. In Q1, Oasis Petroleum brought in $387.80 million in sales but lost $4.87 billion in earnings.

Why ROCE Is Significant

Changes in earnings and sales indicate shifts in Oasis Petroleum’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, Oasis Petroleum posted an ROCE of 0.02%.

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 Oasis Petroleum 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.

For Oasis Petroleum, the return on capital employed ratio shows the number of assets can actually help the company achieve higher returns, an important note investors will take into account when gauging the payoff from long-term financing strategies.

Q2 Earnings Recap

Oasis Petroleum reported Q2 earnings per share at $0.23/share, which beat analyst predictions of $-0.11/share.


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