CDW's Return on Invested Capital Insights

Loading...
Loading...

Pulled from Benzinga Pro data, CDW CDW posted Q1 earnings of $230.10 million, an increase from Q4 of 19.88%. Sales dropped to $5.10 billion, a 6.16% decrease between quarters. In Q4, CDW earned $287.20 million, and total sales reached $5.44 billion.

What Is ROIC?

Earnings data without context is not clear and can difficult to base trading decisions on. Return on Invested Capital (ROIC) helps to filter signal from noise by measuring yearly pre-tax profit relative to invested capital by a business. Generally, a higher ROIC suggests successful growth of a company and is a sign of higher earnings per share in the future. In Q1, CDW posted an ROIC of 4.82%.

It is important to keep in mind that ROIC evaluates past performance and is not used as a predictive tool. It is a good measure of a company's recent performance, but does not account for factors that could affect earnings and sales in the near future.

ROIC is a powerful metric for comparing the effectiveness of capital allocation for similar companies. A relatively high ROIC shows CDW is potentially operating at a higher level of efficiency than other companies in its industry. If the company is generating high profits with its current level of invested capital, some of that money can be reinvested in more capital which will generally lead to higher returns and, ultimately, earnings per share (EPS) growth.

For CDW, the positive return on invested capital ratio of 4.82% 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

CDW reported Q1 earnings per share at $2.03/share, which did not meet analyst predictions of $2.03/share.

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

Loading...
Loading...
Date
ticker
name
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: EarningsBZI-ROCE
We simplify the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...