ROCE Insights For Playa Hotels & Resorts

During Q4, Playa Hotels & Resorts's (NASDAQ:PLYA) reported sales totaled $66.24 million. Despite a 0.39% in earnings, the company posted a loss of $53.76 million. In Q3, Playa Hotels & Resorts brought in $28.74 million in sales but lost $53.56 million in earnings.

What Is Return On Capital Employed?

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 Q4, Playa Hotels & Resorts posted an ROCE of -0.09%.

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.

Return on Capital Employed is an important measurement of efficiency and a useful tool when comparing companies that operate in the same industry. A relatively high ROCE indicates a company may be generating profits that can be reinvested into more capital, leading to higher returns and growing EPS for shareholders.

For Playa Hotels & Resorts, the return on capital employed ratio shows the current amount of assets may not actually be helping the company achieve higher returns, a note many investors will take into account when making long-term financial decisions.

Q4 Earnings Recap

Playa Hotels & Resorts reported Q4 earnings per share at $-0.44/share, which beat analyst predictions of $-0.45/share.