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Return On Capital Employed Overview: Consolidated Edison

Looking at Q1, Consolidated Edison (NYSE:ED) earned $860.00 million, a 69.63% increase from the preceding quarter. Consolidated Edison also posted a total of $3.68 billion in sales, a 24.22% increase since Q4. In Q4, Consolidated Edison earned $507.00 mill...

05/10/2021 11:18

Looking at Q1, Consolidated Edison (NYSE:ED) earned $860.00 million, a 69.63% increase from the preceding quarter. Consolidated Edison also posted a total of $3.68 billion in sales, a 24.22% increase since Q4. In Q4, Consolidated Edison earned $507.00 million, and total sales reached $2.96 billion.

What Is ROCE?

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, Consolidated Edison posted an ROCE of 0.04%.

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 an important metric for the comparison of similar companies. A relatively high ROCE shows Consolidated Edison 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 Consolidated Edison's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q1 Earnings Insight

Consolidated Edison reported Q1 earnings per share at $1.44/share, which beat analyst predictions of $1.36/share.