0.86(3.05%) Volume: 8,008,255 11:08PM EDT| Market Cap : 22.69 B | Enterprise Value : 30.96 B | P/E (TTM) : 17.83 | P/B : 2.06 |
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Joel Greenblatt defined Return on Capital differently in his book The Little Book That Still Beats the Market (Little Books. Big Profits). He defines Return on Capital as EBIT divided by the total of Property, Plant and Equipment and net working capital. Corning's annualized return on capital (Joel Greenblatt) for the quarter that ended in Jun. 2019 was 6.34%.
During the past 13 years, Corning's highest Return on Capital (Joel Greenblatt) was 43.96%. The lowest was 10.60%. And the median was 22.89%.
Corning's 5-Year average Growth Rate of Return on Capital (Joel Greenblatt) was -13.60% per year.
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
| Corning Quarterly Data | ||||||||||||||||||||
| Sep14 | Dec14 | Mar15 | Jun15 | Sep15 | Dec15 | Mar16 | Jun16 | Sep16 | Dec16 | Mar17 | Jun17 | Sep17 | Dec17 | Mar18 | Jun18 | Sep18 | Dec18 | Mar19 | Jun19 | |
| ROC (Joel Greenblatt) % |
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22.41 | 19.94 | 9.78 | 15.21 | 6.34 |
* The bar in red indicates where Corning's ROC (Joel Greenblatt) % falls into.
Joel Greenblatt defined Return on Capital differently in his book The Little Book That Still Beats the Market (Little Books. Big Profits) . He defines Return on Capital as follows:
| ROC (Joel Greenblatt) % | = | EBIT | / | Average of (Net fixed Assets | + | Net Working Capital) |
EBIT stands for Earnings Before Interest and Taxes.
Fixed Assets are also known as non-current assets. They include the Property, Plant and Equipment that the firm needs in its operation.
GuruFocus calculates net working capital as: (Accounts Receivable + Total Inventories + Other Current Assets) - (Accounts Payable & Accrued Expense + Deferred Revenue + Other Current Liabilities). We're trying to account for OPERATING assets and liabilities (part of daily business) when calculating working capital. Cash and marketable securities are considered NON-OPERATING assets and are not included in calculation. We will also back out all interest bearing debt, short term debt and the portion of long term debt that is due in the current period from the current liabilities. This debt will be considered when computing cost of capital and it would be inappropriate to count it twice.
| Working Capital | (Q: Mar. 2019 ) | ||||||||||
| = | (Accounts Receivable | + | Total Inventories | + | Other Current Assets) | - | (Accounts Payable & Accrued Expense | + | Defer. Rev. | + | Other Current Liabilities) |
| = | (1974 | + | 2190 | + | 729) | - | (1515 | + | 0 | + | 1537) |
| = | 1841 |
| Working Capital | (Q: Jun. 2019 ) | ||||||||||
| = | (Accounts Receivable | + | Total Inventories | + | Other Current Assets) | - | (Accounts Payable & Accrued Expense | + | Defer. Rev. | + | Other Current Liabilities) |
| = | (2103 | + | 2291 | + | 739) | - | (1446 | + | 0 | + | 1454) |
| = | 2233 |
When net working capital is negative, 0 is used.
So Joel Greenblatt's Return on Capital of Corning for the quarter that ended in Jun. 2019 can be restated as:
| ROC (Joel Greenblatt's) | (Q: Jun. 2019 ) | ||||||
| = | EBIT | / | Average of (Net fixed Assets | + | Net Working Capital) | ||
| = | EBIT | / | Average of (Property, Plant and Equipment | + | Net Working Capital) | ||
| Q: Mar. 2019 | Q: Jun. 2019 | ||||||
| = | EBIT | / | ( ( (Property, Plant and Equipment + Net Working Capital) | + | (Property, Plant and Equipment + Net Working Capital) ) | / | 2 ) |
| = | 1080 | / | ( ( (14878 + max(1841, 0)) | + | (15137 + max(2233, 0)) ) | / | 2 ) |
| = | 1080 | / | ( ( 16719 | + | 17370 ) | / | 2 ) |
| = | 1080 | / | 17044.5 | ||||
| = | 6.34 % |
Note: The EBIT data used here is four times the quarterly (Jun. 2019) EBIT data.
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
The way Joel Greenblatt defines Return on Capital is a more accurate measure of how efficiently the company generates returns onthe capital actually invested in the business. EBIT is used instead of net income because the tax and interest payment may be affected by factors other than the core business operation. Intangible assets are not included in the calculation because they don't need to be replaced.
Joel Greenblatt uses his definition of Return on Capital and Earnings Yield (Joel Greenblatt) to rank companies.
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