Benzinga | Dec 9, 2021 10:00PM EST

How Bad Are Conn's Earnings? | Return On Invested Capital

Benzinga Pro data, Conn's (NASDAQ:CONN) reported Q3 sales of $405.46 million. Earnings fell to $18.2 million, resulting in a 51% decrease from last quarter. In Q2, Conn's brought in $418.38 million in sales and reported $37 million in earnings.

What Is Return On Invested Capital?

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, Conn's posted an ROIC of 5.02%.

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, Conn's posted an ROIC of 5.02%.

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 Conn's, the positive return on invested capital ratio of 5.02% 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.

Analyst Predictions

Conn's reported Q3 earnings per share at $0.6/share, which beat analyst predictions of $0.59/share.

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