Benzinga | Nov 4, 2021 11:30AM EDT

Looking Into Rimini Street's Return On Invested Capital

According to Benzinga Pro, during Q3, Rimini Street (NASDAQ:RMNI) earned $7.53 million, a 64.27% increase from the preceding quarter. Rimini Street also posted a total of $95.64 million in sales, a 4.4% increase since Q2. In Q2, Rimini Street earned $4.58 million, and total sales reached $91.61 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 Q3, Rimini Street posted an ROIC of -4.72%.

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 Q3, Rimini Street posted an ROIC of -4.72%.

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 Rimini Street, a negative ROIC ratio of -4.72% 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

Rimini Street reported Q3 earnings per share at $-0.08/share, which did not meet analyst predictions of $0.11/share.