Benzinga | Sep 17, 2020 09:48AM EDT

Looking Into Dave & Buster's Enter's Return On Capital Employed

In Q2, Dave & Buster's Enter (NASDAQ:PLAY) posted sales of $50.83 million. Earnings were up 32.08%, but Dave & Buster's Enter still reported an overall loss of $81.11 million. In Q1, Dave & Buster's Enter brought in $159.81 million in sales but lost $61.41 million in earnings.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in Dave & Buster's Enter'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, Dave & Buster's Enter posted an ROCE of -0.32%.

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.

Return on Capital Employed is an important measurement of efficiency and a useful tool when comparing companies that operate in the same industry. A relatively high ROCE indicates a company may be generating profits that can be reinvested into more capital, leading to higher returns and growing EPS for shareholders.

In Dave & Buster's Enter's case, the ROCE ratio shows the amount of assets may not be helping the company achieve higher returns. Investors may take this into account before making any long-term financial decisions.

Q2 Earnings Recap

Dave & Buster's Enter reported Q2 earnings per share at $-1.24/share, which beat analyst predictions of $-1.39/share.