Benzinga | Jun 4, 2021 10:49AM EDT

Return On Capital Employed Overview: Centrus Energy

Centrus Energy (AMEX:LEU) posted Q1 earnings of $5.20 million, an increase from Q4 of 66.67%. Sales dropped to $55.60 million, a 40.15% decrease between quarters. Centrus Energy earned $15.60 million, and sales totaled $92.90 million in Q4.

What Is ROCE?

Changes in earnings and sales indicate shifts in Centrus Energy'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 Q1, Centrus Energy 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.

ROCE is an important metric for the comparison of similar companies. A relatively high ROCE shows Centrus Energy is potentially operating at a higher level of efficiency than other companies in its industry. If the company is generating high profits with its current level of capital, some of that money can be reinvested in more capital which will generally lead to higher returns and earnings per share growth.

In Centrus Energy'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

Centrus Energy reported Q1 earnings per share at $0.33/share, which beat analyst predictions of $0.02/share.