ServiceNow's Return on Invested Capital Overview

ServiceNow's Return on Invested Capital Overview

Pulled from Benzinga Pro data, ServiceNow NOW showed a loss in earnings since Q1, totaling $20.00 million. Sales, on the other hand, increased by 1.74% to $1.75 billion during Q2. ServiceNow reached earnings of $75.00 million and sales of $1.72 billion in Q1.

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, ServiceNow posted an ROIC of 1.56%.

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, ServiceNow posted an ROIC of 1.56%.

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 ServiceNow, the positive return on invested capital ratio of 1.56% 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

ServiceNow reported Q2 earnings per share at $1.62/share, which beat analyst predictions of $1.54/share.

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

Posted In: BZI-ROCEEarnings