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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 %. Radius Recycling's annualized return on invested capital (ROIC %) for the quarter that ended in Feb. 2024 was -6.35%.
As of today (2024-04-23), Radius Recycling's WACC % is 9.77%. Radius Recycling's ROIC % is 0.16% (calculated using TTM income statement data). Radius Recycling earns returns that do not match up to its cost of capital. It will destroy value as it grows.
The historical data trend for Radius Recycling'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.
Radius Recycling Annual Data | |||||||||||||||||||||
Trend | Aug14 | Aug15 | Aug16 | Aug17 | Aug18 | Aug19 | Aug20 | Aug21 | Aug22 | Aug23 | |||||||||||
ROIC % | Get a 7-Day Free Trial | 7.31 | 2.37 | 15.81 | 13.71 | 2.63 |
Radius Recycling Quarterly Data | ||||||||||||||||||||
May19 | Aug19 | Nov19 | Feb20 | May20 | Aug20 | Nov20 | Feb21 | May21 | Aug21 | Nov21 | Feb22 | May22 | Aug22 | Nov22 | Feb23 | May23 | Aug23 | Nov23 | Feb24 | |
ROIC % | Get a 7-Day Free Trial | 2.74 | 4.73 | 4.93 | -4.23 | -6.35 |
For the Steel subindustry, Radius Recycling'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.
For the Steel industry and Basic Materials sector, Radius Recycling's ROIC % distribution charts can be found below:
* The bar in red indicates where Radius Recycling's ROIC % falls into.
Radius Recycling's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Aug. 2023 is calculated as:
ROIC % (A: Aug. 2023 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (A: Aug. 2022 ) | + | Invested Capital (A: Aug. 2023 )) | / count ) |
= | 41.782 * ( 1 - 9.78% ) | / | ( (1441.953 | + | 1425.378) | / 2 ) |
= | 37.6957204 | / | 1433.6655 | |||
= | 2.63 % |
where
Invested Capital | (A: Aug. 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 | )) |
= | 1826.597 | - | 340.841 | - | ( 43.803 | - | max(0, 381.573 | - | 671.386 | + | 43.803 | )) |
= | 1441.953 |
Invested Capital | (A: Aug. 2023 ) | |||||||||||
= | 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 | )) |
= | 1715.949 | - | 284.539 | - | ( 6.032 | - | max(0, 323.93 | - | 550.34 | + | 6.032 | )) |
= | 1425.378 |
Radius Recycling's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Feb. 2024 is calculated as:
ROIC % (Q: Feb. 2024 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (Q: Nov. 2023 ) | + | Invested Capital (Q: Feb. 2024 )) | / count ) |
= | -88.388 * ( 1 - -3.65% ) | / | ( (1420.542 | + | 1467.038) | / 2 ) |
= | -91.614162 | / | 1443.79 | |||
= | -6.35 % |
where
Invested Capital | (Q: Nov. 2023 ) | |||||||||||
= | 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 | )) |
= | 1692.654 | - | 267.704 | - | ( 4.408 | - | max(0, 305.159 | - | 535.447 | + | 4.408 | )) |
= | 1420.542 |
Invested Capital | (Q: Feb. 2024 ) | |||||||||||
= | 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 | )) |
= | 1745.529 | - | 264.929 | - | ( 13.562 | - | max(0, 303.976 | - | 594.592 | + | 13.562 | )) |
= | 1467.038 |
Note: The Operating Income data used here is four times the quarterly (Feb. 2024) 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.
Radius Recycling (NAS:RDUS) 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, Radius Recycling's WACC % is 9.77%. Radius Recycling's ROIC % is 0.16% (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.
Thank you for viewing the detailed overview of Radius Recycling's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Brian Souza | officer: SVP, Chief Ops Mgmt Officer | C/O SCHNITZER STEEL INDUSTRIES, INC., 299 SW CLAY ST., PORTLAND OR 97201 |
Steven Heiskell | officer: SVP & Managing Director, APB | 299 SW CLAY ST. SUITE 350, PORTLAND OR 97201 |
James Matthew Vaughn | officer: SVP, GC, & Corp. Secretary | ONE MEMORIAL PLAZA, 800 GESSNER ROAD, SUITE 875, HOUSTON TX 77024 |
Stefano R. Gaggini | officer: Corporate Controller | 299 SW CLAY ST. SUITE 350, PORTLAND OR 97201 |
Michael R Henderson | officer: SVP & Pres Metal Recyling Bus | P O BOX 10047, PORTLAND OR 97296 |
Mark Schuessler | officer: VP and CAO | C/O SCHNITZER STEEL INDUSTRIES, INC., 299 SW CLAY ST., PORTLAND OR 97201 |
Gregory R Friedman | director | C/O CORTEVA, INC., 974 CENTRE ROAD, BLDG. 735, WILMINGTON DE 19805 |
Wayland R Hicks | director | PO BOX 330608, MIAMIA FL 33233 |
Peter B Saba | officer: SVP & General Counsel | 6903 ROCKLEDGE DRIVE, BETHESDA MD 20817 |
Leslie L Shoemaker | director | TETRA TECH, INC., 3475 EAST FOOTHILL BOULEVARD, PASADENA CA 91107 |
Richard Peach | officer: Deputy CFO | 299 SW CLAY STREET, SUITE 350, PORTLAND OR 97201 |
John D Carter | director, officer: President and CEO | 17575 LITTLE RIVER DRIVE, BEND OR 97707 |
Glenda J Minor | director | 17000 ROTUNDA DRIVE, DEARBORN MI 48120 |
Wilson D Erich | officer: SVP, Chief HR Officer | 299 SW CLAY ST., SUITE 350, PORTLAND OR 97201 |
Jeffery Dyck | officer: Pres. CascadeSteelRollingMills | 299 SW CLAY STREET, PORTLAND OR 97201 |
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