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Market Overview

Looking Into Sirius XM Holdings's Return On Capital Employed

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Looking at Q3, Sirius XM Holdings (NASDAQ: SIRI) earned $478.00 million, a 15.18% increase from the preceding quarter. Sirius XM Holdings also posted a total of $2.02 billion in sales, a 8.06% increase since Q2. Sirius XM Holdings earned $415.00 million, and sales totaled $1.87 billion in Q2.

Why ROCE Is Significant

Changes in earnings and sales indicate shifts in Sirius XM Holdings’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, Sirius XM Holdings posted an ROCE of -0.52%.

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 Sirius XM 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 generally lead to higher returns and earnings per share growth.

In Sirius XM Holdings'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.

Q3 Earnings Recap

Sirius XM Holdings reported Q3 earnings per share at $0.06/share, which beat analyst predictions of $0.05/share.

 

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