Benzinga | Aug 12, 2021 11:23AM EDT

Return on Capital Employed Overview: Rocket Companies

After pulling data from Benzinga Pro it seems like during Q1, Rocket Companies (NYSE:RKT) brought in sales totaling $4.04 billion. However, earnings decreased 108.96%, resulting in a loss of $1.17 billion. Rocket Companies earned $13.03 billion, and sales totaled $4.78 billion in Q4.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in Rocket Companies'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, Rocket Companies posted an ROCE of -0.14%.

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.

For Rocket Companies, the return on capital employed ratio shows the current amount of assets may not actually be helping the company achieve higher returns, a note many investors will take into account when making long-term financial decisions.

Analyst Predictions

Rocket Companies reported Q1 earnings per share at $0.89/share, which did not meet analyst predictions of $0.9/share.