ROCE Insights For Dollar General

Looking at Q4, Dollar General DG earned $872.22 million, a 12.82% increase from the preceding quarter. Dollar General also posted a total of $8.41 billion in sales, a 2.62% increase since Q3. Dollar General earned $773.13 million, and sales totaled $8.20 billion in Q3.

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 Q4, Dollar General posted an ROCE of 0.13%.

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 Dollar General 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 Dollar General's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q4 Earnings Insight

Dollar General reported Q4 earnings per share at $2.62/share, which did not meet analyst predictions of $2.72/share.