Benzinga | Dec 22, 2020 10:06AM EST

ROCE Insights For International Paper

Looking at Q3, International Paper (NYSE:IP) earned $387.00 million, a 0.52% increase from the preceding quarter. International Paper also posted a total of $5.12 billion in sales, a 5.28% increase since Q2. In Q2, International Paper earned $385.00 million, and total sales reached $4.87 billion.

What Is ROCE?

Changes in earnings and sales indicate shifts in International Paper's Return on Capital Employed, a measure of yearly pre-tax profit relative to capital employed by a business. Generally, a higher ROCE suggests successful growth of a company and is a sign of higher earnings per share in the future. In Q3, International Paper posted an ROCE of 0.05%.

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 International Paper's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q3 Earnings Insight

International Paper reported Q3 earnings per share at $0.71/share, which beat analyst predictions of $0.48/share.