Return on invested capital of Cable One
According to Benzinga Pro data cable one CABO recorded a 59.62% drop in profits compared to the first quarter. Sales, however, rose 0.55% from the previous quarter to $429.08 million. Despite the increase in sales this quarter, the decline in profits may suggest that Cable One is not using its capital as efficiently as possible. Cable One posted a profit of $171.48 million and sales of $426.73 million in the first quarter.
Why is ROIC important?
Return on invested capital is a measure of the annual pre-tax profit relative to the capital invested by a business. Changes in profits and sales indicate changes in a company’s ROIC. A higher return on investment is generally indicative of successful business growth and is a sign of higher earnings per share in the future. A low or negative ROIC suggests otherwise. In the second quarter, Cable One posted a return on investment of 2.29%.
Keep in mind that while ROI is a good measure of a company’s recent performance, it’s not a very reliable indicator of a company’s profits or sales in the near future.
ROIC is a powerful metric for comparing the efficiency of capital allocation for similar companies. A relatively high return on investment shows that Cable One potentially operates at a higher level of efficiency than other companies in its industry. If the company is generating high profits with its current level of invested capital, some of that money can be reinvested in more capital, which will generally lead to higher returns and ultimately earnings per share growth. (EPS).
For Cable One, the positive ROI ratio of 2.29% suggests that management is allocating its capital efficiently. Efficient capital allocation is a positive indicator that a business will achieve more sustainable success and favorable long-term returns.
Estimated future income
Cable One reported Q2 earnings per share of $12.1/share, which fell short of analysts’ forecast of $13.13/share.
This article was generated by Benzinga’s automated content engine and reviewed by an editor.