Benzinga | Sep 3, 2020 09:53AM EDT

ROCE Insights For Akebia Therapeutics

In Q2, Akebia Therapeutics (NASDAQ:AKBA) posted sales of $90.14 million. Earnings were up 193.99%, but Akebia Therapeutics still reported an overall loss of $173.82 million. In Q1, Akebia Therapeutics brought in $88.48 million in sales but lost $59.12 million in earnings.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in Akebia Therapeutics's Return on Capital Employed, a measure of yearly pre-tax profit relative to capital employed in a business. Generally, a higher ROCE suggests successful growth in a company and is a sign of higher earnings per share for shareholders in the future. In Q2, Akebia Therapeutics posted an ROCE of -0.47%.

It is important to keep in mind ROCE evaluates past performance and is not used as a predictive tool. It is a good measure of a company's recent performance, but several factors could affect earnings and sales in the near future.

Return on Capital Employed is an important measurement of efficiency and a useful tool when comparing companies that operate in the same industry. A relatively high ROCE indicates a company may be generating profits that can be reinvested into more capital, leading to higher returns and growing EPS for shareholders.

In Akebia Therapeutics's case, the ROCE ratio shows the amount of assets may not be helping the company achieve higher returns. Investors may take this into account before making any long-term financial decisions.

Q2 Earnings Recap

Akebia Therapeutics reported Q2 earnings per share at $-0.44/share, which beat analyst predictions of $-0.5/share.