GURUFOCUS.COM » STOCK LIST » USA » NYSE » Canadian National Railway Co (NYSE:CNI) » Definitions » ROIC %
Switch to:

Canadian National Railway Co ROIC %

: 12.18% (As of Jun. 2022)
View and export this data going back to 1995. Start your Free Trial

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Canadian National Railway Co's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2022 was 12.18%.

As of today (2022-08-20), Canadian National Railway Co's WACC % is 4.52%. Canadian National Railway Co's ROIC % is 10.98% (calculated using TTM income statement data). Canadian National Railway Co 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.


Canadian National Railway Co ROIC % Historical Data

The historical data trend for Canadian National Railway Co'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.

Canadian National Railway Co 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 16.82 11.43 11.49 10.64 10.55

Canadian National Railway Co 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 10.67 10.87 11.41 9.08 12.18

Competitive Comparison

For the Railroads subindustry, Canadian National Railway Co'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.

   

Canadian National Railway Co ROIC % Distribution

For the Transportation industry and Industrials sector, Canadian National Railway Co's ROIC % distribution charts can be found below:

* The bar in red indicates where Canadian National Railway Co's ROIC % falls into.



Canadian National Railway Co ROIC % Calculation

Canadian National Railway Co'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 )
=4741.40625 * ( 1 - 22.75% )/( (33572.488094309 + 35882.03125)/ 2 )
=3662.736328125/34727.259672154
=10.55 %

where

Invested Capital(A: Dec. 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))
=34978.530720587 - 1540.3232102428 - ( 444.2189085799 - max(0, 2556.015301741 - 2421.7347177766+444.2189085799))
=33572.488094309

Invested Capital(A: Dec. 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))
=37920.3125 - 1799.21875 - ( 654.6875 - max(0, 2437.5 - 2676.5625+654.6875))
=35882.03125

Canadian National Railway Co'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 )
=6010.6216807248 * ( 1 - 24.5% )/( (36730.647709321 + 37783.505154639)/ 2 )
=4538.0193689472/37257.07643198
=12.18 %

where

Invested Capital(Q: Mar. 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))
=38101.105845182 - 1851.5007898894 - ( 387.0458135861 - max(0, 3039.4944707741 - 2558.4518167457+387.0458135861))
=36730.647709321

Invested Capital(Q: Jun. 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))
=38491.877538269 - 1803.3427054046 - ( 363.16776007498 - max(0, 3714.4642299281 - 2619.4939081537+363.16776007498))
=37783.505154639

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.


Canadian National Railway Co  (NYSE:CNI) 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, Canadian National Railway Co's WACC % is 4.52%. Canadian National Railway Co's ROIC % is 10.98% (calculated using TTM income statement data). Canadian National Railway Co 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. Canadian National Railway Co 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.


Canadian National Railway Co ROIC % Related Terms

Thank you for viewing the detailed overview of Canadian National Railway Co's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.


Canadian National Railway Co Business Description

Canadian National Railway Co logo
Address
935 de La Gauchetiere Street West, Montreal, QC, CAN, H3B 2M9
Canadian National's railway spans Canada from coast to coast and extends through Chicago to the Gulf of Mexico. In 2019, CN delivered almost 6 million carloads over its 19,600 miles of track. CN generated roughly CAD 14 billion in total revenue by hauling intermodal containers (25% of consolidated revenue), petroleum and chemicals (21%), grain and fertilizers (16%), forest products (12%), metals and mining (11%), automotive shipments (6%), and coal (4%). Other items constitute the remaining revenue.

Canadian National Railway Co Headlines

Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)