Benzinga | Jul 20, 2021 10:48AM EDT

Looking into Jefferies Financial Group's Return on Capital Employed

Pulled from Benzinga Pro data Jefferies Financial Group (NYSE:JEF) posted Q2 earnings of $497.67 million, an increase from Q1 of 38.66%. Sales dropped to $1.95 billion, a 21.55% decrease between quarters. In Q1, Jefferies Financial Group earned $811.35 million, and total sales reached $2.49 billion.

What Is ROCE?

Changes in earnings and sales indicate shifts in Jefferies Financial Group'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, Jefferies Financial Group posted an ROCE of 0.05%.

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

Analyst Predictions

Jefferies Financial Group reported Q2 earnings per share at $1.3/share, which beat analyst predictions of $0.9/share.