Benzinga | Jul 1, 2021 10:58AM EDT

Academy Sports Insights: Return On Capital Employed

Looking at Q1, Academy Sports (NASDAQ:ASO) earned $239.07 million, a 69.52% increase from the preceding quarter. Academy Sports's sales decreased to $1.58 billion, a 1.06% change since Q4. In Q4, Academy Sports earned $141.03 million, whereas sales reached $1.60 billion.

What Is ROCE?

Changes in earnings and sales indicate shifts in Academy Sports'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, Academy Sports posted an ROCE of 0.18%.

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

Q1 Earnings Recap

Academy Sports reported Q1 earnings per share at $1.89/share, which beat analyst predictions of $0.83/share.