Benzinga | Jun 29, 2021 11:00AM EDT

Campbell Soup: Return On Capital Employed Insights

Campbell Soup (NYSE:CPB) posted Q3 earnings of $272.00 million, an increase from Q2 of 23.6%. Sales dropped to $1.98 billion, a 12.94% decrease between quarters. Campbell Soup earned $356.00 million, and sales totaled $2.28 billion in Q2.

What Is ROCE?

Changes in earnings and sales indicate shifts in Campbell Soup'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, Campbell Soup posted an ROCE of 0.09%.

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

Q3 Earnings Insight

Campbell Soup reported Q3 earnings per share at $0.57/share, which did not meet analyst predictions of $0.66/share.