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FedNat Holding Co ROIC %

: -8.14% (As of Jun. 2020)
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ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. FedNat Holding Co's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2020 was -8.14%.

As of today (2020-10-23), FedNat Holding Co's WACC % is 10.43%. FedNat Holding Co's ROIC % is -1.82% (calculated using TTM income statement data). FedNat Holding Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.


FedNat Holding Co ROIC % Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

FedNat Holding Co Annual Data
Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19
ROIC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 7.29 0.24 0.77 2.24 1.83

FedNat Holding Co Quarterly Data
Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20
ROIC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 3.95 3.01 -2.41 1.62 -8.14

Competitive Comparison
* 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.


FedNat Holding Co ROIC % Distribution

* The bar in red indicates where FedNat Holding Co's ROIC % falls into.



FedNat Holding Co ROIC % Calculation

FedNat Holding Co's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2019 is calculated as:

ROIC % (A: Dec. 2019 )
=NOPAT/Average Invested Capital
=EBIT * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2018 ) + Invested Capital (A: Dec. 2019 ))/ count )
=11.489 * ( 1 - -41.8% )/( (817.15365 + 963.93605)/ 2 )
=16.291402/890.54485
=1.83 %

where

Invested Capital(A: Dec. 2018 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash and cash equivalents - 5% * Revenue )
=925.371 - 63.599 - ( 64.423 - 5% * 396.093 )
=817.15365

Invested Capital(A: Dec. 2019 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash and cash equivalents - 5% * Revenue )
=1179.016 - 102.467 - ( 133.361 - 5% * 414.961 )
=963.93605

FedNat Holding Co's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jun. 2020 is calculated as:

ROIC % (Q: Jun. 2020 )
=NOPAT/Average Invested Capital
=EBIT * ( 1 - Tax Rate % )/( (Invested Capital (Q: Mar. 2020 ) + Invested Capital (Q: Jun. 2020 ))/ count )
=-123.32 * ( 1 - 34.41% )/( (996.64195 + 989.70095)/ 2 )
=-80.885588/993.17145
=-8.14 %

where

Invested Capital(Q: Mar. 2020 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash and cash equivalents - 5% * Revenue )
=1177.098 - 63.051 - ( 123.19 - 5% * 115.699 )
=996.64195

Invested Capital(Q: Jun. 2020 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash and cash equivalents - 5% * Revenue )
=1214.786 - 67.876 - ( 163.91 - 5% * 134.019 )
=989.70095

Note: The EBIT data used here is four times the quarterly (Jun. 2020) data.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


FedNat Holding Co  (NAS:FNHC) 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, FedNat Holding Co's WACC % is 10.43%. FedNat Holding Co's ROIC % is -1.82% (calculated using TTM income statement data).


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.


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