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Model N's Return on Invested Capital Insights

Benzinga Pro data, Model N (NYSE:MODN) reported Q2 sales of $53.28 million. Earnings fell to a loss of $8.04 million, resulting in a 28.3% decrease from last quarter.

Benzinga · 06/10/2022 11:49

Benzinga Pro data, Model N (NYSE:MODN) reported Q2 sales of $53.28 million. Earnings fell to a loss of $8.04 million, resulting in a 28.3% decrease from last quarter. Model N collected $51.54 million in revenue during Q1, but reported earnings showed a $6.27 million loss.

What Is Return On Invested Capital?

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, Model N posted an ROIC of -1.51%.

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, Model N posted an ROIC of -1.51%.

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 Model N, a negative ROIC ratio of -1.51% 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

Model N reported Q2 earnings per share at $0.14/share, which beat analyst predictions of $0.08/share.

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