Benzinga | Apr 13, 2021 10:44AM EDT

Return On Capital Employed Overview: Cadence Bancorp

Looking at Q4, Cadence Bancorp (NYSE:CADE) earned $258.32 million, a 339.31% increase from the preceding quarter. Cadence Bancorp also posted a total of $366.49 million in sales, a 96.37% increase since Q3. Cadence Bancorp earned $58.80 million, and sales totaled $186.63 million in Q3.

Why ROCE Is Significant

Changes in earnings and sales indicate shifts in Cadence Bancorp'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, Cadence Bancorp 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.

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

Q4 Earnings Recap

Cadence Bancorp reported Q4 earnings per share at $1.57/share, which beat analyst predictions of $1.48/share.