Market Overview

Looking Into NextEra Energy's Return On Capital Employed

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NextEra Energy (NYSE: NEE) showed a loss in earnings since Q2, totaling $1.02 billion. Sales, on the other hand, increased by 13.82% to $4.79 billion during Q3. In Q2, NextEra Energy earned $1.17 billion and total sales reached $4.20 billion.

Why ROCE Is Significant

Changes in earnings and sales indicate shifts in NextEra Energy’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 Q3, NextEra Energy 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 NextEra Energy 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 NextEra Energy's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q3 Earnings Recap

NextEra Energy reported Q3 earnings per share at $2.66/share, which beat analyst predictions of $2.58/share.

 

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Posted-In: Earnings News