Continental AG (Continental AG) ROC % : 0.28% (As of Dec. 2023)

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What is Continental AG ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Continental AG's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 0.28%.

As of today (2024-04-28), Continental AG's WACC % is 2.88%. Continental AG's ROC % is 2.02% (calculated using TTM income statement data). Continental AG earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Continental AG ROC % Historical Data

The historical data trend for Continental AG's ROC % 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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Continental AG ROC % Chart

Continental AG Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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20.84

4.75

2.16

0.01

2.10

Continental AG Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
ROC %	Get a 7-Day Free Trial															-0.01	3.59	2.33	1.98	0.28

Continental AG ROC % Calculation

Continental AG's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	834.242 * ( 1 - 26.21% )	/	( (28770.234	+	29770.775)	/ 2 )
=	615.5871718	/	29270.5045
=	2.10 %

where

	Invested Capital		(A: Dec. 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	))
=	40176.589	-	8963.347	-	( 2586.123	-	max(0, 17830.297	-	20273.305	+	2586.123	))
=	28770.234

	Invested Capital		(A: Dec. 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	))
=	41169.902	-	8472.846	-	( 2926.281	-	max(0, 16848.746	-	20270.229	+	2926.281	))
=	29770.775

Continental AG's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Sep. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	129.552 * ( 1 - 35.08% )	/	( (30774.6	+	29770.775)	/ 2 )
=	84.1051584	/	30272.6875
=	0.28 %

where

	Invested Capital		(Q: Sep. 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	))
=	41031.377	-	7731.697	-	( 2525.08	-	max(0, 17412.38	-	20966.916	+	2525.08	))
=	30774.6

	Invested Capital		(Q: Dec. 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	))
=	41169.902	-	8472.846	-	( 2926.281	-	max(0, 16848.746	-	20270.229	+	2926.281	))
=	29770.775

Note: The Operating Income data used here is four times the quarterly (Dec. 2023) data.

Continental AG (OTCPK:CTTAY) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. 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 ROC % 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, Continental AG's WACC % is 2.88%. Continental AG's ROC % is 2.02% (calculated using TTM income statement data). Continental AG 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 %, ROC % 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.

Continental AG ROC % Related Terms

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Continental AG (Continental AG) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Vehicles & Parts » Continental AG (OTCPK:CTTAY) » Definitions » ROC %

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CTTAF:USA CTT:Romania CON:Italy CONd:UK 0LQ1:UK CON:Germany

Address

Vahrenwalder Strasse 9, Hanover, NI, DEU, 30165

Website

https://www.continental.com

Continental is a global auto supplier and tiremaker. Operating segments include the automotive group (electrical architecture and networking, autonomous mobility, safety and motion, smart mobility, and user experience), tires, and ContiTech which uses rubber in industrial and automotive components and systems. Last year, automotive group revenue was around 48% of the total, tire was 35%, ContiTech was 16%, and contract manufacturing for Vitesco was 1%. Top five customers include Ford, Mercedes-Benz, the Renault-Nissan-Mitsubishi alliance, Stellantis, and Volkswagen, representing about 32% of total revenue. Europe, at 47% of total revenue, is the companies largest market, followed by North America at 27%, Asia (mostly China) at 22%, and 4% in other regions.