Looking Into Alimera Sciences’s Return On Capital Employed

Looking Into Alimera Sciences's Return On Capital Employed

© Courtesy of Benzing

Alimera Sciences (NASDAQ:ALIM) had sales of $1,360,000 during the third quarter, according to Benzinga Pro . Profit fell to $5.26 million, down 68.76% from last quarter. In the second quarter, Alimera Sciences posted revenue of $1,460,000, but lost $3,120,000 in profit.

What is growing?

Return on invested capital is a measure of a firm's annual gross profit on invested capital. Changes in revenue and sales indicate changes in a company's ROCE. A higher ROCE usually indicates successful company growth and is a sign of higher earnings per share in the future. A low or negative ROCE indicates the opposite. Alimera Sciences reported a ROCE of 0.29% in the third quarter.

Note that although ROCE is a good measure of a company's recent performance, it is not a reliable predictor of a company's profits or sales in the near future.

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ROCE is a powerful indicator for comparing capital allocation efficiency for similar companies. A relatively high ROCE indicates that Alimera Sciences can operate at a higher efficiency than other companies in its industry. If a company earns a high return on its current level of capital, some of that money can be reinvested in additional capital, which usually results in higher returns and ultimately higher earnings per share (EPS).

For Alimera Sciences, positive ROI of 0.29% indicates that management is deploying its capital effectively. Effective capital allocation is a positive indicator that a business will achieve long-term success and favorable long-term profitability.

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Analysts forecast

Alimera Sciences reported Q3 EPS of -$0.75 per share, missing analysts' expectations of -$0.4 per share.

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

Alimera Sciences – OIS@AAO 2015

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