How Bad Are Zuora's Earnings? | Return On Invested Capital

Benzinga Pro data, Zuora ZUO reported Q2 sales of $86.49 million. Earnings fell to a loss of $23.00 million, resulting in a 32.13% decrease from last quarter. In Q1, Zuora brought in $80.33 million in sales but lost $17.41 million in earnings.

Why Is ROIC Significant?

Return on Invested Capital is a measure of yearly pre-tax profit relative to capital invested by a business. Changes in earnings and sales indicate shifts in a company's ROIC. A higher ROIC 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 ROIC suggests the opposite. In Q2, Zuora posted an ROIC of -12.69%.

Keep in mind, while ROIC 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 Invested Capital is a measure of yearly pre-tax profit relative to capital invested by a business. Changes in earnings and sales indicate shifts in a company's ROIC. A higher ROIC 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 ROIC suggests the opposite. In Q2, Zuora posted an ROIC of -12.69%.

Keep in mind, while ROIC 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.

For Zuora, a negative ROIC ratio of -12.69% suggests that management may not be effectively allocating their capital.Effective capital allocation is a positive indicator that a company will achieve more durable success and favorable long-term returns; poor capital allocation can be a leech on the performance of a company over time.

Analyst Predictions

Zuora reported Q2 earnings per share at $-0.04/share, which did not meet analyst predictions of $-0.04/share.