Snam SpA (WBO:SRG) ROIC % : 4.62% (As of Sep. 2023)

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What is Snam SpA ROIC %?

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Snam SpA's annualized return on invested capital (ROIC %) for the quarter that ended in Sep. 2023 was 4.62%.

As of today (2024-04-25), Snam SpA's WACC % is 4.06%. Snam SpA's ROIC % is 3.90% (calculated using TTM income statement data). Snam SpA earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Snam SpA ROIC % Historical Data

The historical data trend for Snam SpA'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.

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Snam SpA ROIC % Chart

Snam SpA Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROIC %

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4.63

4.18

5.03

3.59

4.31

Snam SpA Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
ROIC %	Get a 7-Day Free Trial															8.69	4.85	4.69	4.62	0.96

Competitive Comparison of Snam SpA's ROIC %

For the Utilities - Regulated Gas subindustry, Snam SpA'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.

Snam SpA's ROIC % Distribution in the Utilities - Regulated Industry

For the Utilities - Regulated industry and Utilities sector, Snam SpA's ROIC % distribution charts can be found below:

* The bar in red indicates where Snam SpA's ROIC % falls into.

Snam SpA ROIC % Calculation

Snam SpA's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2022 is calculated as:

	ROIC % (A: Dec. 2022 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2021 )	+	Invested Capital (A: Dec. 2022 ))	/ count )
=	1379 * ( 1 - 36% )	/	( (27111	+	22031)	/ 2 )
=	882.56	/	24571
=	3.59 %

where

	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	))
=	27161	-	2944	-	( 1337	-	max(0, 7973	-	5079	+	1337	))
=	27111

	Invested Capital		(A: Dec. 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	))
=	22098	-	469	-	( 1757	-	max(0, 469	-	67	+	1757	))
=	22031

Snam SpA's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Sep. 2023 is calculated as:

	ROIC % (Q: Sep. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Sep. 2023 ))	/ count )
=	1572 * ( 1 - 22.86% )	/	( (29269	+	23222)	/ 2 )
=	1212.6408	/	26245.5
=	4.62 %

where

	Invested Capital		(Q: Jun. 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	))
=	30706	-	5227	-	( 649	-	max(0, 10929	-	7139	+	649	))
=	29269

	Invested Capital		(Q: Sep. 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	))
=	23316	-	725	-	( 0	-	max(0, 725	-	94	+	0	))
=	23222

Note: The Operating Income data used here is four times the quarterly (Sep. 2023) data.

Snam SpA (WBO:SRG) 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, Snam SpA's WACC % is 4.06%. Snam SpA's ROIC % is 3.90% (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.

Snam SpA ROIC % Related Terms

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Snam SpA (WBO:SRG) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Utilities » Utilities - Regulated » Snam SpA (WBO:SRG) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

SNMRY:USA SRG:Italy SRGm:UK 0NQP:UK SNM:Germany

Address

Piazza Santa Barbara, 7, San Donato Milanese, Milan, ITA, 20097

Website

https://www.snam.it

Snam operates a network of about 38,000 kilometers of natural gas pipelines in Italy and abroad. It also holds 17.1% of European gas storage capacity and 6.5 billion cubic meters of LNG regasification capacity. Snam is investing in hydrogen, biofuels, carbon capture and storage, and energy efficiencies to prepare for the energy transition. Snam became independent from Eni in 2012 after the latter sold its stake to Cassa Depositi e Prestiti, a financial institution controlled by the Ministry of Economy and Finance.