Return on Capital Employed Insights for Radian Group

Return on Capital Employed Insights for Radian Group

After pulling data from Benzinga Pro it seems like during Q2, Radian Group RDN earned $216.56 million, a 18.79% increase from the preceding quarter. Radian Group's sales decreased to $254.76 million, a 6.3% change since Q1. In Q1, Radian Group brought in $271.87 million in sales but only earned $182.30 million.

What Is ROCE?

Changes in earnings and sales indicate shifts in Radian Group'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 Q2, Radian Group posted an ROCE of 0.05%.

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

Upcoming Earnings Estimate

Radian Group reported Q2 earnings per share at $0.75/share, which beat analyst predictions of $0.69/share.

Posted In: BZI-ROCEEarnings