Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Benzinga
Benzinga
Business
Benzinga Insights

TimkenSteel Earnings Perspective: Return On Invested Capital

According to Benzinga Pro data TimkenSteel (NYSE:TMST) posted a 35.03% decrease in earnings from Q4. Sales, however, increased by 4.05% over the previous quarter to $352.00 million. Despite the increase in sales this quarter, the decrease in earnings may suggest TimkenSteel is not utilizing their capital as effectively as possible. TimkenSteel reached earnings of $57.10 million and sales of $338.30 million in Q4.

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 Q1, TimkenSteel posted an ROIC of 5.62%.

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 Q1, TimkenSteel posted an ROIC of 5.62%.

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 TimkenSteel, the positive return on invested capital ratio of 5.62% 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

TimkenSteel reported Q1 earnings per share at $0.92/share, which beat analyst predictions of $0.81/share.

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

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.