ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Old Dominion Freight Line's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was 26.43%.
As of today (2024-04-25), Old Dominion Freight Line's WACC % is 12.07%. Old Dominion Freight Line's ROIC % is 26.67% (calculated using TTM income statement data).
Old Dominion Freight Line generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Old Dominion Freight Line ROIC % Historical Data
The historical data trend for Old Dominion Freight Line's ROIC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Competitive Comparison of Old Dominion Freight Line's ROIC %
For the Trucking subindustry, Old Dominion Freight Line's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Old Dominion Freight Line's ROIC % Distribution in the Transportation Industry
For the Transportation industry and Industrials sector, Old Dominion Freight Line's ROIC % distribution charts can be found below:
* The bar in red indicates where Old Dominion Freight Line's ROIC % falls into.
Old Dominion Freight Line ROIC % Calculation
Old Dominion Freight Line's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:
Note:
The Operating Income data used here is four times the quarterly (Dec. 2023) data.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Old Dominion Freight Line (NAS:ODFL) ROIC % Explanation
ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROIC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Old Dominion Freight Line's WACC % is 12.07%. Old Dominion Freight Line's ROIC % is 26.67% (calculated using TTM income statement data).
Old Dominion Freight Line generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Old Dominion Freight Line earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Be Aware
Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Old Dominion Freight Line ROIC % Related Terms
Thank you for viewing the detailed overview of Old Dominion Freight Line's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Old Dominion Freight Line (Old Dominion Freight Line) Business Description
Old Dominion Freight Line is the second-largest less than truckload carrier in the United States, with more than 250 service centers and 11,000-plus tractors. It is one of the most disciplined and efficient providers in the trucking industry, and its profitability and capital returns stand head and shoulders above its peers. Strategic initiatives revolve around increasing network density through market share gains and maintaining industry-leading service via steadfast infrastructure investment.
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
ODFL has been successfully added to your 