Premium Brands Holdings (TSX:PBH) ROC % : 4.84% (As of Dec. 2023)

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What is Premium Brands Holdings 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 %. Premium Brands Holdings's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 4.84%.

As of today (2024-04-28), Premium Brands Holdings's WACC % is 7.09%. Premium Brands Holdings's ROC % is 5.12% (calculated using TTM income statement data). Premium Brands Holdings earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Premium Brands Holdings ROC % Historical Data

The historical data trend for Premium Brands Holdings'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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Premium Brands Holdings ROC % Chart

Premium Brands Holdings Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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6.16

5.01

5.05

5.53

5.14

Premium Brands Holdings 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															7.63	3.25	5.95	6.31	4.84

Premium Brands Holdings ROC % Calculation

Premium Brands Holdings'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 )
=	336 * ( 1 - 29.28% )	/	( (4616.5	+	4625.2)	/ 2 )
=	237.6192	/	4620.85
=	5.14 %

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	))
=	5078.6	-	450.7	-	( 11.4	-	max(0, 564.8	-	1426.3	+	11.4	))
=	4616.5

	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	))
=	5158.1	-	505.3	-	( 27.6	-	max(0, 637.9	-	1328	+	27.6	))
=	4625.2

Premium Brands Holdings'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 )
=	320.4 * ( 1 - 29.91% )	/	( (4650.8	+	4625.2)	/ 2 )
=	224.56836	/	4638
=	4.84 %

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	))
=	5206	-	514.5	-	( 40.7	-	max(0, 636	-	1370.5	+	40.7	))
=	4650.8

	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	))
=	5158.1	-	505.3	-	( 27.6	-	max(0, 637.9	-	1328	+	27.6	))
=	4625.2

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

Premium Brands Holdings (TSX:PBH) 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, Premium Brands Holdings's WACC % is 7.09%. Premium Brands Holdings's ROC % is 5.12% (calculated using TTM income statement data). Premium Brands Holdings 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.

Premium Brands Holdings ROC % Related Terms

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Premium Brands Holdings (TSX:PBH) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Consumer Packaged Goods » Premium Brands Holdings Corp (TSX:PBH) » Definitions » ROC %

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PRBZF:USA

Address

100 - 10991 Shellbridge Way, Richmond, BC, CAN, V6X 3C6

Website

https://www.premiumbrandsholdings.com

Premium Brands Holdings Corp is engaged in specialty food manufacturing, premium food distribution, and wholesale businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada, and Washington State. The company's business segments include Specialty Foods, Premium Food Distribution, and Corporate. The Specialty Foods segment consists of its specialty food manufacturing businesses, which contributes about two-thirds of the group revenue; the Premium Food Distribution segment consists of the company's distribution and wholesale businesses; the Corporate segment includes the company's head office activities along with its finance and information systems. Its geographical segments are the United States and Canada.