Benzinga | Nov 5, 2021 12:06PM EDT

Houghton Mifflin Harcourt Earnings Perspective: Return On Invested Capital

According to Benzinga Pro, during Q3, Houghton Mifflin Harcourt (NASDAQ:HMHC) earned $92.09 million, a 303.76% increase from the preceding quarter. Houghton Mifflin Harcourt also posted a total of $417.13 million in sales, a 35.14% increase since Q2. In Q2, Houghton Mifflin Harcourt earned $22.81 million, and total sales reached $308.67 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, Houghton Mifflin Harcourt posted an ROIC of 5.56%.

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, Houghton Mifflin Harcourt posted an ROIC of 5.56%.

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 Houghton Mifflin Harcourt, the positive return on invested capital ratio of 5.56% 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.

Analyst Predictions

Houghton Mifflin Harcourt reported Q3 earnings per share at $0.72/share, which beat analyst predictions of $0.18/share.