Benzinga | Aug 12, 2020 12:04PM EDT

ROCE Insights For OPKO Health

OPKO Health (NASDAQ:OPK) showed a loss in earnings since Q1, totaling $27.18 million. Sales, on the other hand, increased by 42.41% to $301.20 million during Q2. In Q1, OPKO Health brought in $211.50 million in sales but lost $40.76 million in earnings.

Why ROCE Is Significant

Changes in earnings and sales indicate shifts in OPKO Health's Return on Capital Employed, a measure of yearly pre-tax profit relative to capital employed in a business. Generally, a higher ROCE suggests successful growth in a company and is a sign of higher earnings per share for shareholders in the future. In Q2, OPKO Health posted an ROCE of 0.02%.

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

ROCE is an important metric for the comparison of similar companies. A relatively high ROCE shows OPKO Health 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 capital, some of that money can be reinvested in more capital which will lead to higher returns and earnings per share growth.

In OPKO Health's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q2 Earnings Recap

OPKO Health reported Q2 earnings per share at $0.05/share, which beat analyst predictions of $-0.07/share.