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How Bad Are GoHealth's Earnings? | Return On Invested Capital

GoHealth (NASDAQ:GOCO) brought in sales totaling $196.90 million during Q2 according to data provided by Benzinga Pro. However, earnings decreased 1451.71%, resulting in a loss of $18.95 million.

Benzinga · 09/24/2021 10:44

GoHealth (NASDAQ:GOCO) brought in sales totaling $196.90 million during Q2 according to data provided by Benzinga Pro. However, earnings decreased 1451.71%, resulting in a loss of $18.95 million. In Q1, GoHealth earned $1.40 million, and total sales reached $204.18 million.

Why Is ROIC Significant?

Return on Invested Capital is a measure of yearly pre-tax profit relative to capital invested by a business. Changes in earnings and sales indicate shifts in a company's ROIC. A higher ROIC 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 ROIC suggests the opposite. In Q2, GoHealth posted an ROIC of -2.13%.

Keep in mind, while ROIC 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.

Return on Invested Capital is a measure of yearly pre-tax profit relative to capital invested by a business. Changes in earnings and sales indicate shifts in a company's ROIC. A higher ROIC 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 ROIC suggests the opposite. In Q2, GoHealth posted an ROIC of -2.13%.

Keep in mind, while ROIC 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.

For GoHealth, a negative ROIC ratio of -2.13% 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.

Analyst Predictions

GoHealth reported Q2 earnings per share at $-0.12/share, which did not meet analyst predictions of $-0.04/share.