Benzinga | Jun 7, 2021 10:02AM EDT

Looking Into Intra-Cellular Therapies's Return On Capital Employed

During Q1, Intra-Cellular Therapies (NASDAQ:ITCI) brought in sales totaling $15.88 million. However, earnings decreased 13.23%, resulting in a loss of $53.22 million. In Q4, Intra-Cellular Therapies brought in $12.45 million in sales but lost $61.33 million in earnings.

What Is Return On Capital Employed?

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, Intra-Cellular Therapies posted an ROCE of -0.09%.

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.

For Intra-Cellular Therapies, the return on capital employed ratio shows the current amount of assets may not actually be helping the company achieve higher returns, a note many investors will take into account when making long-term financial decisions.

Q1 Earnings Insight

Intra-Cellular Therapies reported Q1 earnings per share at $-0.65/share, which beat analyst predictions of $-0.8/share.