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Sanderson Farms ROIC %

: 80.08% (As of Apr. 2022)
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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 %. Sanderson Farms's annualized return on invested capital (ROIC %) for the quarter that ended in Apr. 2022 was 80.08%.

As of today (2022-08-20), Sanderson Farms's WACC % is 5.59%. Sanderson Farms's ROIC % is 54.34% (calculated using TTM income statement data). Sanderson Farms generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.


Sanderson Farms ROIC % Historical Data

The historical data trend for Sanderson Farms's ROIC % 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.

* Premium members only.

Sanderson Farms Annual Data
Trend Oct12 Oct13 Oct14 Oct15 Oct16 Oct17 Oct18 Oct19 Oct20 Oct21
ROIC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 25.38 4.76 4.02 -0.13 29.46

Sanderson Farms Quarterly Data
Jul17 Oct17 Jan18 Apr18 Jul18 Oct18 Jan19 Apr19 Jul19 Oct19 Jan20 Apr20 Jul20 Oct20 Jan21 Apr21 Jul21 Oct21 Jan22 Apr22
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 24.92 41.19 48.31 48.88 80.08

Competitive Comparison

For the Packaged Foods subindustry, Sanderson Farms's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* 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. Note that "N/A" values will not show up in the chart.

   

Sanderson Farms ROIC % Distribution

For the Consumer Packaged Goods industry and Consumer Defensive sector, Sanderson Farms's ROIC % distribution charts can be found below:

* The bar in red indicates where Sanderson Farms's ROIC % falls into.



Sanderson Farms ROIC % Calculation

Sanderson Farms's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Oct. 2021 is calculated as:

ROIC % (A: Oct. 2021 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Oct. 2020 ) + Invested Capital (A: Oct. 2021 ))/ count )
=632.078 * ( 1 - 23.69% )/( (1599.84 + 1675)/ 2 )
=482.3387218/1637.42
=29.46 %

where

Invested Capital(A: Oct. 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))
=1849.031 - 200.13 - ( 49.061 - max(0, 224.107 - 578.135+49.061))
=1599.84

Invested Capital(A: Oct. 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))
=2345.033 - 230.694 - ( 439.339 - max(0, 309.063 - 1086.27+439.339))
=1675

Sanderson Farms's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Apr. 2022 is calculated as:

ROIC % (Q: Apr. 2022 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Jan. 2022 ) + Invested Capital (Q: Apr. 2022 ))/ count )
=1715.772 * ( 1 - 23.71% )/( (1550.664 + 1718.663)/ 2 )
=1308.9624588/1634.6635
=80.08 %

where

Invested Capital(Q: Jan. 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))
=2584.717 - 348.23 - ( 685.823 - max(0, 358.937 - 1347.166+685.823))
=1550.664

Invested Capital(Q: Apr. 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))
=2826.514 - 278.727 - ( 829.124 - max(0, 287.847 - 1591.395+829.124))
=1718.663

Note: The Operating Income data used here is four times the quarterly (Apr. 2022) data.

* 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.


Sanderson Farms  (NAS:SAFM) 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, Sanderson Farms's WACC % is 5.59%. Sanderson Farms's ROIC % is 54.34% (calculated using TTM income statement data). Sanderson Farms generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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. Sanderson Farms 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 %, 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.


Sanderson Farms ROIC % Related Terms

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Sanderson Farms Business Description

Sanderson Farms logo
Traded in Other Exchanges
Address
127 Flynt Road, Laurel, MS, USA, 39443
Sanderson Farms Inc is a dressed-chicken processor in the United States, producing and selling a variety of fresh, frozen, and value-added chicken products to grocers, food-service operators, and distributors. Most revenue is generated in the Southeastern, Southwestern, Northeastern, and Western United States. The company's product portfolio consists of tray packs and large birds, catering to grocery and food-service customers. It sells chill-packed, ice-packed, bulk-packed, and frozen chicken in whole, cut-up, and boneless form under the brand name Sanderson Farms to retailers, distributors, and casual dining operators in the United States.
Executives
Perez Sonia director 127 FLYNT ROAD LAUREL MS 39443
Kelly Green Edith director 3131 DEMOCRAT ROAD BLDG B206 MEMPHIS TN 38118
Barksdale John David director 127 FLYNT ROAD LAUREL MS 39443
Mestayer Suzanne T director 1100 POYDRAS STREET NEW ORLEANS LA 70163
Rigney Tim officer: Controller/Secretary 127 FLYNT ROAD, P.O. BOX 988 LAUREL MS 39441
Mooney Dianne director 7449 ASHLAND LANE BIRMINGHAM AL 35242
Khayat Robert C director PO BOX 1848 UNIVERSITY MS 38677
Banks Fred L Jr director 111 EAST CAPITOL STREET SUITE 600 JACKSON MS 39201-2122
Cooley Toni D director 253 OLD JACKSON ROAD MADISON MS 39110
Bierbusse John director 3500 NORTH LAKE SHORE DRIVE #14A CHICAGO IL 60657
Zacharias Donald W director
Taylor Rowan director
Ritter Charles W Jr director C/O SANDERSON FARM 225 N 13TH AVE LAUREL MS 39441-0998
Pittman Jones Gail director C/O SANDERSON FARMS INC PO BOX 988 225 N 13TH AVE LAUREL MS 39441-0988
Livingston Phil K director C/O SANDERSON FARM 225 N 13TH AVE LAUREL MS 39441-0998

Sanderson Farms Headlines

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