Benzinga | Jun 29, 2021 11:02AM EDT

Greif Insights: Return On Capital Employed

Looking at Q2, Greif (NYSE:GEF) earned $107.10 million, a 64.77% increase from the preceding quarter. Greif also posted a total of $1.34 billion in sales, a 16.91% increase since Q1. Greif earned $65.00 million, and sales totaled $1.15 billion in Q1.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in Greif'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 Q2, Greif posted an ROCE of 0.07%.

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

Q2 Earnings Recap

Greif reported Q2 earnings per share at $1.13/share, which beat analyst predictions of $1.06/share.