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Twitter (NYSE: TWTR) reported a 120.48% decrease in revenue from Q2. However, revenue increased 36.99% from the previous quarter to $ 936.23 million. Despite the spike in revenue this quarter, the drop in earnings could suggest Twitter is not using its capital as effectively as possible. In the second quarter, Twitter brought in $ 683.44 million in revenue, but lost $ 273.93 million in revenue.
What is the return on capital employed?
The return on capital employed is a measure of the annual profit before tax in relation to the capital employed by a company. Changes in profit and sales indicate shifts in a company’s ROCE. A higher ROCE is generally representative of a company’s successful growth and a sign of higher earnings per share in the future. A low or negative ROCE suggests the opposite. In the third quarter, Twitter published a ROCE of 0.01%.
Keep in mind that while ROCE is a good measure of a company’s recent performance, it is not a very reliable indicator of a company’s earnings or sales in the near future.
Should Investors Sell Right Now? Or is it worth joining Twitter?
The return on capital employed is an important measure of efficiency and a useful tool when comparing companies operating in the same industry. A relatively high ROCE indicates that a company may be generating profits that can be reinvested in more capital, resulting in higher returns and growing EPS for shareholders.
On Twitter, the ratio of return on capital employed shows how many assets can actually help the company achieve higher returns – an important clue investors will consider when measuring the payoff of long-term funding strategies.
Q3 earnings recap
Twitter reported earnings per share of $ 0.19 / share for the third quarter, beating analysts’ guidance of $ 0.06 / share.
Buy, hold or sell Twitter?
How will Twitter develop now? Is your money safe in this stock? The answers to these questions and why you need to act now can be found in the latest analysis on Twitter shares.
Twitter: Buy or Sell? Read more here …
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