Benzinga | Nov 10, 2021 11:50AM EST

Ormat Technologies Earnings Perspective: Return On Invested Capital

According to Benzinga Pro, during Q3, Ormat Technologies (NYSE:ORA) earned $35.99 million, a 25.75% increase from the preceding quarter. Ormat Technologies also posted a total of $158.84 million in sales, a 8.13% increase since Q2. In Q2, Ormat Technologies earned $28.62 million, and total sales reached $146.90 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, Ormat Technologies posted an ROIC of 1.02%.

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, Ormat Technologies posted an ROIC of 1.02%.

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 Ormat Technologies, the positive return on invested capital ratio of 1.02% 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

Ormat Technologies reported Q3 earnings per share at $0.32/share, which beat analyst predictions of $0.25/share.

This article was generated by Benzinga's automated content engine and reviewed by an editor.