According to Benzinga Pro, during Q3, Service Today NOW earned $80.00 million, a 300.0% increase from the prior quarter. ServiceNow also posted a total of $1.83 billion in sales, a 4.51% increase from Q2. ServiceNow earned $20.00 million, and sales reached $1.75 billion in Q2.
What is Return on Invested Capital?
Return on Invested Capital is a measure of annual pre-tax income relative to a business’s invested capital. Changes in revenues and sales indicate changes in a company’s ROIC. A higher ROIC usually represents a company’s successful growth and is a sign of higher earnings per share in the future. A low or negative ROIC indicates the opposite. In Q3, ServiceNow posted an ROIC of 0.39%.
Remember, while ROIC is a good measure of a company’s recent performance, it is not a very reliable predictor of a company’s earnings or sales in the near future.
ROIC is a powerful metric for comparing the effectiveness of capital allocation for similar companies. A relatively high ROIC shows ServiceNow is potentially operating at a higher level of efficiency than other companies in its industry. If the company is earning a high return on its current level of invested capital, some of that money can be reinvested in more capital which will generally lead to higher profits and, ultimately, growth of earnings per share (EPS).
For ServiceNow, the positive return on invested capital ratio of 0.39% suggests that management is effectively allocating their capital. Effective capital allocation is a positive indicator that a company will achieve stronger success and favorable long-term profitability.
Analyst Forecasts
ServiceNow reported Q3 earnings per share at $1.96/share, which was above analyst forecasts of $1.85/share.
This article was generated by Benzinga’s automated content engine and reviewed by an editor.