Benzinga | Nov 24, 2020 10:03AM EST

Return On Capital Employed Overview: Conduent

Conduent (NASDAQ:CNDT) showed a loss in earnings since Q2, totaling $29.00 million. Sales, on the other hand, increased by 2.46% to $1.04 billion during Q3. In Q2, Conduent brought in $1.02 billion in sales but lost $18.00 million in earnings.

What Is ROCE?

Changes in earnings and sales indicate shifts in Conduent'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, Conduent 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 Conduent 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 Conduent's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q3 Earnings Insight

Conduent reported Q3 earnings per share at $0.26/share, which beat analyst predictions of $0.12/share.