Market Overview

Looking Into GoPro's Return On Capital Employed

Share:

GoPro (NASDAQ: GPRO) reported Q2 sales of $134.25 million. Earnings fell to a loss of $44.91 million, resulting in a 19.96% decrease from last quarter. In Q1, GoPro brought in $119.40 million in sales but lost $56.11 million in earnings.

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 Q2, GoPro posted an ROCE of -0.34%.

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 GoPro 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 GoPro's case, the ROCE ratio shows the amount of assets may not be helping the company achieve higher returns. Investors may take this into account before making any long-term financial decisions.

Q2 Earnings Insight

GoPro reported Q2 earnings per share at $-0.2/share, which did not meet analyst predictions of $-0.17/share.

 

Related Articles (GPRO)

View Comments and Join the Discussion!

Posted-In: Earnings News Tech

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com