Benzinga | Nov 4, 2021 11:31AM EDT

eXp World Holdings Earnings Perspective: Return On Invested Capital

According to Benzinga Pro data eXp World Holdings (NASDAQ:EXPI) posted a 32.37% decrease in earnings from Q2. Sales, however, increased by 10.01% over the previous quarter to $1.10 billion. Despite the increase in sales this quarter, the decrease in earnings may suggest eXp World Holdings is not utilizing their capital as effectively as possible. In Q2, eXp World Holdings earned $16.51 million, and total sales reached $999.89 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, eXp World Holdings posted an ROIC of 9.65%.

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, eXp World Holdings posted an ROIC of 9.65%.

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 eXp World Holdings, the positive return on invested capital ratio of 9.65% 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

eXp World Holdings reported Q3 earnings per share at $0.15/share, which beat analyst predictions of $0.11/share.