Benzinga | Jan 27, 2022 09:52AM EST

United Rentals Earnings Perspective: Return On Invested Capital

According to Benzinga Pro, during Q4, United Rentals (NYSE:URI) earned $481.00 million, a 17.6% increase from the preceding quarter. United Rentals also posted a total of $2.78 billion in sales, a 6.93% increase since Q3. In Q3, United Rentals earned $409.00 million, and total sales reached $2.60 billion.

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 Q4, United Rentals posted an ROIC of 4.36%.

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 Q4, United Rentals posted an ROIC of 4.36%.

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 United Rentals, the positive return on invested capital ratio of 4.36% 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

United Rentals reported Q4 earnings per share at $7.39/share, which beat analyst predictions of $6.72/share.

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