Benzinga | Jan 26, 2021 10:04AM EST

ROCE Insights For AcelRx Pharmaceuticals

During Q3, AcelRx Pharmaceuticals's (NASDAQ:ACRX) reported sales totaled $1.37 million. Despite a 32.24% in earnings, the company posted a loss of $9.04 million. AcelRx Pharmaceuticals collected $2.92 million in revenue during Q2, but reported earnings showed a $6.83 million loss.

What Is ROCE?

Changes in earnings and sales indicate shifts in AcelRx Pharmaceuticals'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, AcelRx Pharmaceuticals posted an ROCE of 0.16%.

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.

ROCE is an important metric for the comparison of similar companies. A relatively high ROCE shows AcelRx Pharmaceuticals is potentially operating at a higher level of efficiency than other companies in its industry. If the company is generating high profits with its current level of capital, some of that money can be reinvested in more capital which will generally lead to higher returns and earnings per share growth.

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

Q3 Earnings Insight

AcelRx Pharmaceuticals reported Q3 earnings per share at $-0.1/share, which did not meet analyst predictions of $-0.08/share.