Benzinga | Oct 4, 2021 01:51PM EDT

Snowflake's Return on Invested Capital Overview

According to Benzinga Pro data, during Q2, Snowflake (NYSE:SNOW) posted sales of $272.20 million. Earnings were up 2.65%, but Snowflake still reported an overall loss of $200.14 million. In Q1, Snowflake brought in $228.91 million in sales but lost $205.59 million in earnings.

What Is Return On Invested Capital?

Earnings data without context is not clear and can difficult to base trading decisions on. Return on Invested Capital (ROIC) helps to filter signal from noise by measuring yearly pre-tax profit relative to invested capital by a business. Generally, a higher ROIC suggests successful growth of a company and is a sign of higher earnings per share in the future. In Q2, Snowflake posted an ROIC of -4.03%.

It is important to keep in mind that ROIC evaluates past performance and is not used as a predictive tool. It is a good measure of a company's recent performance, but does not account for factors that could affect earnings and sales in the near future.

Earnings data without context is not clear and can difficult to base trading decisions on. Return on Invested Capital (ROIC) helps to filter signal from noise by measuring yearly pre-tax profit relative to invested capital by a business. Generally, a higher ROIC suggests successful growth of a company and is a sign of higher earnings per share in the future. In Q2, Snowflake posted an ROIC of -4.03%.

It is important to keep in mind that ROIC evaluates past performance and is not used as a predictive tool. It is a good measure of a company's recent performance, but does not account for factors that could affect earnings and sales in the near future.

For Snowflake, a negative ROIC ratio of -4.03% suggests that management may not be effectively allocating their capital.Effective capital allocation is a positive indicator that a company will achieve more durable success and favorable long-term returns; poor capital allocation can be a leech on the performance of a company over time.

Upcoming Earnings Estimate

Snowflake reported Q2 earnings per share at $-0.04/share, which beat analyst predictions of $-0.15/share.