Benzinga | Jan 27, 2021 10:13AM EST

Looking Into ANGI Homeservices's Return On Capital Employed

ANGI Homeservices (NASDAQ:ANGI) reported Q3 sales of $389.91 million. Earnings fell to a loss of $3.02 million, resulting in a 117.11% decrease from last quarter. ANGI Homeservices reached earnings of $17.64 million and sales of $375.06 million in Q2.

Why ROCE Is Significant

Changes in earnings and sales indicate shifts in ANGI Homeservices'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 Q3, ANGI Homeservices posted an ROCE of -0.0%.

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 ANGI Homeservices 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 ANGI Homeservices'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.

Q3 Earnings Recap

ANGI Homeservices reported Q3 earnings per share at $0.01/share, which did not meet analyst predictions of $0.01/share.