Benzinga | May 21, 2021 12:43PM EDT

Return On Capital Employed Overview: CASI Pharmaceuticals

CASI Pharmaceuticals (NASDAQ:CASI) reported Q1 sales of $5.74 million. Earnings fell to a loss of $15.60 million, resulting in a 1.97% decrease from last quarter. In Q4, CASI Pharmaceuticals brought in $4.82 million in sales but lost $15.91 million in earnings.

Why ROCE Is Significant

Return on Capital Employed is a measure of yearly pre-tax profit relative to capital employed by a business. Changes in earnings and sales indicate shifts in a company's ROCE. A higher ROCE is generally representative of successful growth of a company and is a sign of higher earnings per share in the future. A low or negative ROCE suggests the opposite. In Q1, CASI Pharmaceuticals posted an ROCE of -0.13%.

Keep in mind, while ROCE is a good measure of a company's recent performance, it is not a highly reliable predictor of a company's earnings or 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 CASI Pharmaceuticals'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.

Q1 Earnings Insight

CASI Pharmaceuticals reported Q1 earnings per share at $-0.11/share, which did not meet analyst predictions of $-0.06/share.