Benzinga | Jul 1, 2021 10:57AM EDT

Return On Capital Employed Overview: Thor Industries

Looking at Q3, Thor Industries (NYSE:THO) earned $242.97 million, a 35.37% increase from the preceding quarter. Thor Industries also posted a total of $3.46 billion in sales, a 26.81% increase since Q2. In Q2, Thor Industries earned $179.49 million, and total sales reached $2.73 billion.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in Thor Industries'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 Q3, Thor Industries posted an ROCE of 0.09%.

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

Q3 Earnings Recap

Thor Industries reported Q3 earnings per share at $3.29/share, which beat analyst predictions of $2.28/share.