Benzinga | Oct 28, 2021 11:59AM EDT

How Good Are Deckers Outdoor's Earnings? | Return On Invested Capital

According to Benzinga Pro, during Q1, Deckers Outdoor (NYSE:DECK) earned $61.83 million, a 13.15% increase from the preceding quarter. Deckers Outdoor's sales decreased to $504.68 million, a 10.07% change since Q4. In Q4, Deckers Outdoor brought in $561.19 million in sales but only earned $54.65 million.

Why Is ROIC Significant?

Return on Invested Capital is a measure of yearly pre-tax profit relative to capital invested by a business. Changes in earnings and sales indicate shifts in a company's ROIC. A higher ROIC is generally representative of successful growth of a company and is a sign of higher earnings per share in the future. A low or negative ROIC suggests the opposite. In Q1, Deckers Outdoor posted an ROIC of 4.36%.

Keep in mind, while ROIC is a good measure of a company's recent performance, it is not a highly reliable predictor of a company's earnings or sales in the near future.

Return on Invested Capital is a measure of yearly pre-tax profit relative to capital invested by a business. Changes in earnings and sales indicate shifts in a company's ROIC. A higher ROIC is generally representative of successful growth of a company and is a sign of higher earnings per share in the future. A low or negative ROIC suggests the opposite. In Q1, Deckers Outdoor posted an ROIC of 4.36%.

Keep in mind, while ROIC is a good measure of a company's recent performance, it is not a highly reliable predictor of a company's earnings or sales in the near future.

For Deckers Outdoor, the positive return on invested capital ratio of 4.36% suggests that management is allocating their capital effectively. Effective capital allocation is a positive indicator that a company will achieve more durable success and favorable long-term returns.

Upcoming Earnings Estimate

Deckers Outdoor reported Q1 earnings per share at $1.71/share, which beat analyst predictions of $-0.14/share.