Smiths News (AQSE:CNCT.GB) ROIC % : 41.90% (As of Feb. 2024)

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What is Smiths News ROIC %?

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Smiths News's annualized return on invested capital (ROIC %) for the quarter that ended in Feb. 2024 was 41.90%.

As of today (2024-05-12), Smiths News's WACC % is 6.98%. Smiths News's ROIC % is 45.50% (calculated using TTM income statement data). Smiths News 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.

Smiths News ROIC % Historical Data

The historical data trend for Smiths News'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.

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Smiths News ROIC % Chart

Smiths News Annual Data

Trend

Aug14

Aug15

Aug16

Aug17

Aug18

Aug19

Aug20

Aug21

Aug22

Aug23

ROIC %

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20.90

15.59

19.62

32.63

36.20

Smiths News Semi-Annual Data
	Aug14	Feb15	Aug15	Feb16	Aug16	Feb17	Aug17	Feb18	Aug18	Feb19	Aug19	Feb20	Aug20	Feb21	Aug21	Feb22	Aug22	Feb23	Aug23	Feb24
ROIC %	Get a 7-Day Free Trial															34.96	44.27	43.89	42.70	41.90

Competitive Comparison of Smiths News's ROIC %

For the Publishing subindustry, Smiths News'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.

Smiths News's ROIC % Distribution in the Media - Diversified Industry

For the Media - Diversified industry and Communication Services sector, Smiths News's ROIC % distribution charts can be found below:

* The bar in red indicates where Smiths News's ROIC % falls into.

Smiths News ROIC % Calculation

Smiths News's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Aug. 2023 is calculated as:

	ROIC % (A: Aug. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Aug. 2022 )	+	Invested Capital (A: Aug. 2023 ))	/ count )
=	38.8 * ( 1 - 21.07% )	/	( (87	+	82.2)	/ 2 )
=	30.62484	/	84.6
=	36.20 %

where

	Invested Capital		(A: Aug. 2022 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	189.4	-	112.1	-	( 35.3	-	max(0, 157.2	-	147.5	+	35.3	))
=	87

	Invested Capital		(A: Aug. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	195.3	-	115.3	-	( 37.3	-	max(0, 158.9	-	156.7	+	37.3	))
=	82.2

Smiths News's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Feb. 2024 is calculated as:

	ROIC % (Q: Feb. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Aug. 2023 )	+	Invested Capital (Q: Feb. 2024 ))	/ count )
=	37.4 * ( 1 - 26.11% )	/	( (82.2	+	49.7)	/ 2 )
=	27.63486	/	65.95
=	41.90 %

where

	Invested Capital		(Q: Aug. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	195.3	-	115.3	-	( 37.3	-	max(0, 158.9	-	156.7	+	37.3	))
=	82.2

	Invested Capital		(Q: Feb. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	181.9	-	135.8	-	( 16.5	-	max(0, 142.5	-	138.9	+	16.5	))
=	49.7

Note: The Operating Income data used here is two times the semi-annual (Feb. 2024) data.

Smiths News (AQSE:CNCT.GB) 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, Smiths News's WACC % is 6.98%. Smiths News's ROIC % is 45.50% (calculated using TTM income statement data). Smiths News 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. Smiths News 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.

Smiths News ROIC % Related Terms

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Smiths News (AQSE:CNCT.GB) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Communication Services » Media - Diversified » Smiths News PLC (AQSE:CNCT.GB) » Definitions » ROIC %

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Address

Rowan House, Cherry Orchard North, Kembrey Park, Swindon, Wiltshire, GBR, SN2 8UH

Website

https://www.smithsnews.co.uk

Smiths News PLC is a UK-based wholesale distributor of published content. The group is one of the UK's foremost publishers of newspapers and magazines, and it also operates as a book distributor through bookstores and an online platform serving the needs of academics and public libraries. Geographically, it derives a majority of revenue from the United Kingdom. Its segments include Smiths News Core; Dawson Media Direct (DMD); Instore and others.

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