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Capital Senior Living Earnings Perspective: Return On Invested Capital

Author: Benzinga Insights | September 06, 2021 09:33am

Capital Senior Living (NYSE:CSU) brought in sales totaling $57.54 million during Q2 according to data provided by Benzinga Pro.However, earnings decreased 21.85%, resulting in a loss of $8.54 million. In Q1, Capital Senior Living brought in $61.65 million in sales but lost $7.01 million in earnings.

Why Is ROIC Significant?

Earnings data without context is not clear and can difficult to base trading decisions on. Return on Invested Capital (ROIC) helps to filter signal from noise by measuring yearly pre-tax profit relative to invested capital by a business. Generally, a higher ROIC suggests successful growth of a company and is a sign of higher earnings per share in the future. In Q2, Capital Senior Living posted an ROIC of -1.4%.

It is important to keep in mind that ROIC evaluates past performance and is not used as a predictive tool. It is a good measure of a company's recent performance, but does not account for factors that could affect earnings and sales in the near future.

Earnings data without context is not clear and can difficult to base trading decisions on. Return on Invested Capital (ROIC) helps to filter signal from noise by measuring yearly pre-tax profit relative to invested capital by a business. Generally, a higher ROIC suggests successful growth of a company and is a sign of higher earnings per share in the future. In Q2, Capital Senior Living posted an ROIC of -1.4%.

It is important to keep in mind that ROIC evaluates past performance and is not used as a predictive tool. It is a good measure of a company's recent performance, but does not account for factors that could affect earnings and sales in the near future.

For Capital Senior Living, a negative ROIC ratio of -1.4% suggests that management may not be effectively allocating their capital.Effective capital allocation is a positive indicator that a company will achieve more durable success and favorable long-term returns; poor capital allocation can be a leech on the performance of a company over time.

Analyst Predictions

Capital Senior Living reported Q2 earnings per share at $23.49/share, which beat analyst predictions of $-5.14/share.

Posted In: CSU

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