Benzinga | Mar 11, 2021 11:18AM EST

ROCE Insights For Antero Resources

Antero Resources (NYSE:AR) posted a 120.16% decrease in earnings from Q3. Sales, however, increased by 243.94% over the previous quarter to $1.31 billion. Despite the increase in sales this quarter, the decrease in earnings may suggest Antero Resources is not utilizing their capital as effectively as possible. In Q3, Antero Resources brought in $380.59 million in sales but lost $754.63 million in earnings.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in Antero Resources'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 Q4, Antero Resources posted an ROCE of 0.02%.

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 Antero Resources's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q4 Earnings Insight

Antero Resources reported Q4 earnings per share at $-0.03/share, which did not meet analyst predictions of $0.06/share.