Looking into Clear Channel Outdoor's Return on Capital Employed

After pulling data from Benzinga Pro it seems like during Q2, Clear Channel Outdoor CCO earned $13.44 million, a 105.97% increase from the preceding quarter. Clear Channel Outdoor also posted a total of $531.08 million in sales, a 43.18% increase since Q1. In Q1, Clear Channel Outdoor brought in $370.91 million in sales but lost $224.91 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, Clear Channel Outdoor posted an ROCE of -0.0%.

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 Clear Channel Outdoor 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.

For Clear Channel Outdoor, 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.

Analyst Predictions

Clear Channel Outdoor reported Q2 earnings per share at $-0.27/share, which did not meet analyst predictions of $-0.22/share.

Posted In: BZI-ROCEEarnings

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