Benzinga | Mar 24, 2021 09:29AM EDT

Looking Into RenaissanceRe's Return On Capital Employed





Looking at Q4, RenaissanceRe Holdings (NYSE:RNR) earned $193.55 million, a 148.18% increase from the preceding quarter. RenaissanceRe Holdings also posted a total of $1.40 billion in sales, a 4.73% increase since Q3. In Q3, RenaissanceRe Holdings earned $77.99 million, and total sales reached $1.33 billion.

What Is ROCE?

Changes in earnings and sales indicate shifts in RenaissanceRe Holdings'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, RenaissanceRe Holdings 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 RenaissanceRe Holdings's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q4 Earnings Insight

RenaissanceRe Holdings reported Q4 earnings per share at $-1.59/share, which did not meet analyst predictions of $-1.27/share.