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Vertex Pharmaceuticals ROIC %

: 83.34% (As of Jun. 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 %. Vertex Pharmaceuticals's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2022 was 83.34%.

As of today (2022-08-18), Vertex Pharmaceuticals's WACC % is 5.12%. Vertex Pharmaceuticals's ROIC % is 80.53% (calculated using TTM income statement data). Vertex Pharmaceuticals 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.


Vertex Pharmaceuticals ROIC % Historical Data

The historical data trend for Vertex Pharmaceuticals'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.

Vertex Pharmaceuticals Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21
ROIC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -188.92 135.52 33.36 66.03 59.03

Vertex Pharmaceuticals Quarterly Data
Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22
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 -142.43 83.50 76.40 79.30 83.34

Competitive Comparison

For the Biotechnology subindustry, Vertex Pharmaceuticals'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.

   

Vertex Pharmaceuticals ROIC % Distribution

For the Biotechnology industry and Healthcare sector, Vertex Pharmaceuticals's ROIC % distribution charts can be found below:

* The bar in red indicates where Vertex Pharmaceuticals's ROIC % falls into.



Vertex Pharmaceuticals ROIC % Calculation

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

ROIC % (A: Dec. 2021 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2020 ) + Invested Capital (A: Dec. 2021 ))/ count )
=2779 * ( 1 - 14.22% )/( (3935.8 + 4140.3)/ 2 )
=2383.8262/4038.05
=59.03 %

where

Vertex Pharmaceuticals's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jun. 2022 is calculated as:

ROIC % (Q: Jun. 2022 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Mar. 2022 ) + Invested Capital (Q: Jun. 2022 ))/ count )
=4476 * ( 1 - 20.88% )/( (4180.9 + 4317.4)/ 2 )
=3541.4112/4249.15
=83.34 %

where

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


Vertex Pharmaceuticals  (NAS:VRTX) 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, Vertex Pharmaceuticals's WACC % is 5.12%. Vertex Pharmaceuticals's ROIC % is 80.53% (calculated using TTM income statement data). Vertex Pharmaceuticals 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. Vertex Pharmaceuticals 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.


Vertex Pharmaceuticals ROIC % Related Terms

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Vertex Pharmaceuticals Business Description

Vertex Pharmaceuticals logo
Address
50 Northern Avenue, Boston, MA, USA, 02210
Vertex Pharmaceuticals is a global biotechnology company that discovers and develops small-molecule drugs for the treatment of serious diseases. Its key drugs are Kalydeco, Orkambi, Symdeko, and Trikafta/Kaftrio for cystic fibrosis, where Vertex therapies remain the standard of care globally. In addition to its focus on cystic fibrosis, Vertex is diversifying its pipeline through gene-editing therapies such as CTX001 for beta-thalassemia and sickle-cell disease, small-molecule inhibitors targeting acute and chronic pain using non-opioid treatments, and small-molecule inhibitors of APOL1-mediated kidney diseases. Vertex is also investigating cell therapies to deliver a potential functional cure for type 1 diabetes.
Executives
Upadhyay Suketu director 345 E. MAIN STREET WARSAW IN 46580
Garber Alan M director 3355 MILTON COURT MOUNTAIN VIEW CA 94040
Kearney Terrence C director IN CARE OF HOSPIRA, INC. 275 NORTH FIELD DRIVE LAKE FOREST IL 60045
Carney Lloyd director C/O MICROMUSE INC 139 TOWNSEND ST SAN FRANCISCO CA 94107
Mckenzie Diana director METLIFE 200 PARK AVENUE NEW YORK NY 10166
Bhatia Sangeeta N. director C/O VERTEX PHARMACEUTICALS, INC. 50 NORTHERN AVENUE BOSTON MA 02210
Lee Yuchun director 170 TRACER LA. WALTHAM MA 02451
Ambrose Kristen officer: SVP & Chief Accounting Officer C/O VERTEX PHARMACEUTICALS INCORPORATED 50 NORTHERN AVENUE BOSTON MA 02210
Mcglynn Margaret G director C/O MERCK & CO INC ONE MERCK DRIVE PO BOX 100 WHITEHOUSE STATION NJ 08889-0100
Liu Joy officer: SVP, General Counsel C/O VERTEX PHARMACEUTICALS INCORPORATED 50 NORTHERN AVENUE BOSTON MA 02210
Tatsis Ourania officer: EVP, Chief Reg. & Quality Off. C/O VERTEX PHARMACEUTICALS, INC. 50 NORTHERN AVENUE BOSTON MA 02210
Bozic Carmen officer: EVP and CMO C/O VERTEX PHARMACEUTICALS, INC. 50 NORTHERN AVENUE BOSTON MA 02210
Wagner Charles F Jr officer: EVP & Chief Financial Officer C/O MILLIPORE CORP BILLERICA MA 01820
Arbuckle Stuart A officer: EVP, COO VERTEX PHARMACEUTICALS INCORPORATED 130 WAVERLY ST. CAMBRIDGE MA 02139
Kewalramani Reshma director, officer: CEO & President C/O VERTEX PHARMACEUTICALS, INC. 50 NORTHERN AVENUE BOSTON MA 02210

Vertex Pharmaceuticals Headlines

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