Benzinga | Aug 6, 2020 12:22PM EDT

ROCE Insights For Digital Turbine

Looking at Q1, Digital Turbine (NASDAQ:APPS) earned $10.62 million, a 263.15% increase from the preceding quarter. Digital Turbine also posted a total of $59.01 million in sales, a 49.96% increase since Q4. Digital Turbine earned $2.92 million, and sales totaled $39.35 million in Q4.

Why ROCE Is Significant

Changes in earnings and sales indicate shifts in Digital Turbine'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 Q1, Digital Turbine 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.

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.

For Digital Turbine, the return on capital employed ratio shows the number of assets can actually help the company achieve higher returns, an important note investors will take into account when gauging the payoff from long-term financing strategies.

Q1 Earnings Insight

Digital Turbine reported Q1 earnings per share at $0.13/share, which beat analyst predictions of $0.09/share.