Looking Into Garmin's Return On Invested Capital

Looking Into Garmin's Return On Invested Capital

According to Benzinga Pro, during Q2, Garmin GRMN earned $257.87 million, a 21.87% increase from the preceding quarter. Garmin also posted a total of $1.24 billion in sales, a 5.8% increase since Q1. Garmin earned $211.59 million, and sales totaled $1.17 billion in Q1.

What Is ROIC?

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, Garmin posted an ROIC of 3.66%.

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, Garmin posted an ROIC of 3.66%.

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 Garmin, the positive return on invested capital ratio of 3.66% 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

Garmin reported Q2 earnings per share at $1.44/share, which beat analyst predictions of $1.41/share.

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

Posted In: BZI-ROCEEarnings