Sogou (SOGO) ROC % : -39.23% (As of Jun. 2021)

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What is Sogou 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 %. Sogou's annualized return on capital (ROC %) for the quarter that ended in Jun. 2021 was -39.23%.

As of today (2024-05-11), Sogou's WACC % is 7.60%. Sogou's ROC % is -29.06% (calculated using TTM income statement data). Sogou earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Sogou ROC % Historical Data

The historical data trend for Sogou'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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Sogou ROC % Chart

Sogou Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

ROC %

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30.20

26.74

12.89

17.71

-43.53

Sogou Quarterly Data
	Sep16	Dec16	Mar17	Jun17	Sep17	Dec17	Mar18	Jun18	Sep18	Dec18	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21
ROC %	Get a 7-Day Free Trial															-30.94	-65.21	-38.86	-58.04	-39.23

Sogou ROC % Calculation

Sogou's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2020 is calculated as:

	ROC % (A: Dec. 2020 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2019 )	+	Invested Capital (A: Dec. 2020 ))	/ count )
=	-140.159 * ( 1 - -2.2% )	/	( (342.823	+	315.375)	/ 2 )
=	-143.242498	/	329.099
=	-43.53 %

where

	Invested Capital		(A: Dec. 2019 )
=	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	))
=	1522.402	-	328.07	-	( 1137.814	-	max(0, 453.213	-	1304.722	+	1137.814	))
=	342.823

	Invested Capital		(A: Dec. 2020 )
=	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	))
=	1395.132	-	298.611	-	( 1061.803	-	max(0, 406.279	-	1187.425	+	1061.803	))
=	315.375

Sogou's annualized Return on Capital (ROC %) for the quarter that ended in Jun. 2021 is calculated as:

	ROC % (Q: Jun. 2021 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Mar. 2021 )	+	Invested Capital (Q: Jun. 2021 ))	/ count )
=	-143.52 * ( 1 - -1.88% )	/	( (347.723	+	397.625)	/ 2 )
=	-146.218176	/	372.674
=	-39.23 %

where

	Invested Capital		(Q: Mar. 2021 )
=	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	))
=	1365.938	-	269.969	-	( 1029.196	-	max(0, 345.228	-	1093.474	+	1029.196	))
=	347.723

	Invested Capital		(Q: Jun. 2021 )
=	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	))
=	1387.367	-	262.765	-	( 991.636	-	max(0, 323.192	-	1050.169	+	991.636	))
=	397.625

Note: The Operating Income data used here is four times the quarterly (Jun. 2021) data.

Sogou (NYSE:SOGO) 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, Sogou's WACC % is 7.60%. Sogou's ROC % is -29.06% (calculated using TTM income statement data). Sogou 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.

Sogou ROC % Related Terms

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Sogou (SOGO) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Communication Services » Interactive Media » Sogou Inc (NYSE:SOGO) » Definitions » ROC %

Comparable Companies

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Address

No.1 Unit Zhongguancun East Road, Level 15, Sohu.com Internet Plaza, Haidian District, Beijing, CHN, 100084

Website

https://www.sogou.com

Sogou Inc is an internet company in China which owns search engine called Sogou Search. It is engaged in developing Sogou Input Method, which is a Chinese language input software by both mobile and PC MAUs. Sogou Input Method is a cloud-based Chinese language input software which captures Chinese expressions and phrases on the Internet, which enables Sogou Input Method to build a comprehensive and up-to-date vocabulary library. The company focuses on delivering internet content to users through services such as search access to the vast content from Tencent's Weixin Official Accounts. It operates its business in China and earns the majority of its revenue from China itself.