Canadian Pacific Railway's Return on Invested Capital Overview

Canadian Pacific Railway's Return on Invested Capital Overview

According to Benzinga Pro, during Q2, Canadian Pacific Railway CP earned $480.00 million, a 11.37% increase from the preceding quarter. Canadian Pacific Railway also posted a total of $1.73 billion in sales, a 18.95% increase since Q1. Canadian Pacific Railway earned $431.00 million, and sales totaled $1.45 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, Canadian Pacific Railway posted an ROIC of 1.62%.

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, Canadian Pacific Railway posted an ROIC of 1.62%.

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 Canadian Pacific Railway, the positive return on invested capital ratio of 1.62% 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.

Upcoming Earnings Estimate

Canadian Pacific Railway reported Q2 earnings per share at $0.74/share, which did not meet analyst predictions of $0.8/share.

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

Posted In: BZI-ROCEEarnings