Benzinga | Aug 20, 2021 01:44PM EDT

Return on Capital Employed Insights for Kratos Defense & Security

Pulled from Benzinga Pro data Kratos Defense & Security (NASDAQ:KTOS) showed a loss in earnings since Q1, totaling $3.30 million. Sales, on the other hand, increased by 5.61% to $205.10 million during Q2. Kratos Defense & Security reached earnings of $4.90 million and sales of $194.20 million in Q1.

What Is ROCE?

Changes in earnings and sales indicate shifts in Kratos Defense & Security'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, Kratos Defense & Security posted an ROCE of 0.0%.

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 Kratos Defense & Security's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Upcoming Earnings Estimate

Kratos Defense & Security reported Q2 earnings per share at $0.06/share, which did not meet analyst predictions of $0.06/share.