A look at the return on investment of Academy Sports

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According to Benzinga Pro, during the first trimester, Academy Sports ASO earned $149.81 million, an increase of 5.67% over the previous quarter. Academy Sports sales decreased to $1.47 billion, a change of 18.81% from the fourth quarter. In the fourth quarter, Academy Sports had sales of $1.81 billion, but only earned $141.77 million.

Why is ROCE important?

Return on capital employed is a measure of annual pre-tax profit relative to the capital employed by a business. Changes in profits and sales indicate changes in a company’s ROCE. A higher ROCE is generally indicative of a company’s successful growth and is a sign of higher earnings per share in the future. A low or negative ROCE suggests otherwise. In Q1, Academy Sports posted a ROCE of 0.1%.

Keep in mind that while ROCE is a good measure of a company’s recent performance, it’s not a very reliable indicator of a company’s earnings or sales in the near future.

ROCE is a powerful metric for comparing the efficiency of capital allocation for similar companies. A relatively high ROCE shows that Academy Sports potentially operates 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 growth in earnings per share ( EPS).

For Academy Sports, the positive return on capital employed ratio of 0.1% suggests that management is allocating its capital efficiently. Efficient capital allocation is a positive indicator that a business will achieve more sustainable success and favorable long-term returns.

Analyst predictions

Academy Sports reported first-quarter earnings per share of $1.73/share, beating analysts’ forecast of $1.41/share.

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

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