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Return On Capital Employed Overview: Accel Entertainment, Inc.

Accel Entertainment, Inc. (NYSE:ACEL) reported Q4 sales of $74.41 million. Earnings fell to a loss of $11.97 million, resulting in a 233.19% decrease from last quarter. In Q3, Accel Entertainment, Inc. earned $8.98 million and total sales reached $136.33 million.

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 Q4, Accel Entertainment, Inc. posted an ROCE of -0.09%.

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 Accel Entertainment, Inc. 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 Accel Entertainment, Inc.’s case, the ROCE ratio shows the amount of assets may not be helping the company achieve higher returns. Investors may take this into account before making any long-term financial decisions.

Q4 Earnings Recap

Accel Entertainment, Inc. reported Q4 earnings per share at $-0.04/share, which did not meet analyst predictions of $0.02/share.

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