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Looking Into DermTech's Return On Capital Employed

By Benzinga Insights

Benzinga Pro data, DermTech (NASDAQ:DMTK) reported Q1 sales of $3.72 million. Earnings fell to a loss of $30.11 million, resulting in a 15.56% decrease from last quarter. In Q4, DermTech brought in $3.17 million in sales but lost $26.05 million in earnings.

What Is Return On Capital Employed?

Return on Capital Employed is a measure of yearly pre-tax profit relative to capital employed by a business. Changes in earnings and sales indicate shifts in a company's ROCE. A higher ROCE is generally representative of successful growth of a company and is a sign of higher earnings per share in the future. A low or negative ROCE suggests the opposite. In Q1, DermTech posted an ROCE of -0.15%.

Keep in mind, while ROCE is a good measure of a company's recent performance, it is not a highly reliable predictor of a company's earnings or sales in the near future.

ROCE is a powerful metric for comparing the effectiveness of capital allocation for similar companies. A relatively high ROCE shows DermTech 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, ultimately, earnings per share (EPS) growth.

For DermTech, a negative ROCE ratio of -0.15% 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.

Upcoming Earnings Estimate

DermTech reported Q1 earnings per share at $-1.01/share, which did not meet analyst predictions of $-0.89/share.

This article was generated by Benzinga's automated content engine and reviewed by an editor.

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Dive Deeper:
Looking Into Infinera's Return On Capital Employed
Infinera (NASDAQ:INFN) brought in sales totaling $338.87 million during Q1 according to data provided by Benzinga Pro. However, earnings decreased…
Looking Into Public Storage's Return On Capital Employed
Pulled from Benzinga Pro data, Public Storage (NYSE:PSA) showed a loss in earnings since Q4, totaling $516.29 million. Sales, on…
Looking Into Delta Apparel's Return On Capital Employed
According to Benzinga Pro, during Q2, Delta Apparel (AMEX:DLA) earned $10.13 million, a 175.91% increase from the preceding quarter. Delta…
Looking Into BlueLinx Hldgs's Return On Capital Employed
According to Benzinga Pro, during Q1, BlueLinx Hldgs (NYSE:BXC) earned $133.41 million, a 81.22% increase from the preceding quarter. BlueLinx…
One subscription that gives you access to news from hundreds of sites
Workiva's Return On Capital Employed Insights
Benzinga Pro data, Workiva (NYSE:WK) reported Q1 sales of $129.67 million. Earnings fell to a loss of $18.49 million, resulting…
Looking Into Chesapeake Utilities's Return On Capital Employed
According to Benzinga Pro, during Q1, Chesapeake Utilities (NYSE:CPK) earned $36.93 million, a 62.61% increase from the preceding quarter. Chesapeake…
Get all your news in one place