Benzinga | Oct 27, 2020 09:57AM EDT

ROCE Insights For Staffing 360 Solutions

Staffing 360 Solutions (NASDAQ:STAF) reported Q2 sales of $43.36 million. Earnings fell to a loss of $1.46 million, resulting in a 64.05% decrease from last quarter. Staffing 360 Solutions collected $58.70 million in revenue during Q1, but reported earnings showed a $4.07 million loss.

Why ROCE Is Significant

Changes in earnings and sales indicate shifts in Staffing 360 Solutions's Return on Capital Employed, a measure of yearly pre-tax profit relative to capital employed by a business. Generally, a higher ROCE suggests successful growth of a company and is a sign of higher earnings per share in the future. In Q2, Staffing 360 Solutions posted an ROCE of 0.12%.

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 Staffing 360 Solutions 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 generally lead to higher returns and earnings per share growth.

In Staffing 360 Solutions's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q2 Earnings Insight

Staffing 360 Solutions reported Q2 earnings per share at $-0.59/share, which did not meet analyst predictions of $-0.33/share.