Looking Into Fiserv's Return On Invested Capital

According to Benzinga Pro data Fiserv FISV posted a 10.7% decrease in earnings from Q1. Sales, however, increased by 7.54% over the previous quarter to $4.45 billion. Despite the increase in sales this quarter, the decrease in earnings may suggest Fiserv is not utilizing their capital as effectively as possible. Fiserv reached earnings of $682.00 million and sales of $4.14 billion in Q1.

What Is Return On Invested Capital?

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, Fiserv posted an ROIC of 1.36%.

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, Fiserv posted an ROIC of 1.36%.

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 Fiserv, the positive return on invested capital ratio of 1.36% suggests that management is allocating their capital effectively. Effective capital allocation is a positive indicator that a company will achieve more durable success and favorable long-term returns.

Analyst Predictions

Fiserv reported Q2 earnings per share at $1.56/share, which did not meet analyst predictions of $1.56/share.

This article was generated by Benzinga's automated content engine and reviewed by an editor.