Benzinga | Nov 20, 2020 10:25AM EST

Return On Capital Employed Overview: Zebra Technologies

Looking at Q3, Zebra Technologies (NASDAQ:ZBRA) earned $169.00 million, a 40.83% increase from the preceding quarter. Zebra Technologies also posted a total of $1.13 billion in sales, a 18.41% increase since Q2. In Q2, Zebra Technologies earned $120.00 million, whereas sales reached $956.00 million.

Why ROCE Is Significant

Return on Capital Employed is a measure of yearly pre-tax profit relative to capital employed by a business. Changes in earnings and sales indicate shifts in a company's ROCE. A higher ROCE 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 ROCE suggests the opposite. In Q3, Zebra Technologies posted an ROCE of 0.09%.

Keep in mind, while ROCE 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 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 Zebra Technologies's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q3 Earnings Insight

Zebra Technologies reported Q3 earnings per share at $3.27/share, which beat analyst predictions of $2.81/share.