ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Elanco Animal Health's annualized return on capital (ROC %) for the quarter that ended in Mar. 2026 was 3.56%.
As of today (2026-06-24), Elanco Animal Health's WACC % is 15.51%. Elanco Animal Health's ROC % is 2.40% (calculated using TTM income statement data).
Elanco Animal Health earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Elanco Animal Health (NYSE:ELAN) ROC % Explanation
ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. 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 ROC % 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, Elanco Animal Health's WACC % is 15.51%. Elanco Animal Health's ROC % is 2.40% (calculated using TTM income statement data).
Elanco Animal Health 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 %, ROC % 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.
* 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.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* 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.
Elanco Animal Health (ELAN) has a ROC % of 3.56% as of Mar. 2026. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Elanco Animal Health and its competitors.
Is Elanco Animal Health's ROC % too high?
Elanco Animal Health's current ROC % is 3.56%. The Drug Manufacturers industry median ROC % is 4.44. Elanco Animal Health's value of 3.56% is 19.8% below this industry median. Overall, Elanco Animal Health has a GF Score™ of 66/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Elanco Animal Health's ROC % compare to RGC and NBIX?
Elanco Animal Health's ROC % of 3.56% can be compared against companies in the Drug Manufacturers industry. The industry median ROC % is 4.44. Elanco Animal Health's value of 3.56% is 19.8% below this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROC % for a Drug Manufacturers company?
The median ROC % among Drug Manufacturers companies is 4.44, based on 985 companies in the industry. Companies in the top quartile (top 25%) have a ROC % significantly above this median, while those in the bottom quartile fall well below. However, ROC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Elanco Animal Health's current ROC % of 3.56% is 19.8% below the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROC % mean?
A high ROC % can signal that a stock is expensive relative to its fundamentals. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Elanco Animal Health and its competitors. For the Drug Manufacturers industry, the median ROC % is 4.44 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Elanco Animal Health's current ROC % is 3.56%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Elanco Animal Health stock overvalued right now?
Based on GuruFocus' analysis, Elanco Animal Health (ELAN) is currently considered Significantly Overvalued. The stock's GF Value™ is $15.57, compared to a current price of $23.96 — trading 53.9% above its estimated fair value. The current ROC % is 3.56% and 19.8% below the Drug Manufacturers industry median of 4.44. Elanco Animal Health's overall GF Score™ is 66/100 with 2 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROC % calculated?
ROC % is calculated from a company's financial statements. For Elanco Animal Health (ELAN), the current ROC % is 3.56% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Elanco Animal Health (ELAN) Overvalued in 2026?
Based on GuruFocus' analysis, Elanco Animal Health stock appears to be overvalued.
The current stock price of $23.96 is trading 53.9% above its estimated GF Value™ of $15.57.
GuruFocus considers Elanco Animal Health to be Significantly Overvalued.
Key valuation signals for ELAN:
ROC %: 3.56%
GF Value™: $15.57 vs. price of $23.96 (53.9% above fair value)
Industry Position: 19.8% below the Drug Manufacturers median
No single metric tells the full story. See the ELAN stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Elanco Animal Health is an animal health company that is engaged in developing, manufacturing, and marketing pharma products for companion and food animals. It spun off from Eli Lilly in 2018 and acquired Janssen Animal Health in 2011, Novartis Animal Health in 2014, Boehringer Ingelheim Vetmedica in 2017, and Bayer Animal Health in 2020. The company's operations are conducted globally, and it sells its products in over 90 countries. It offers a range of food animal products used in cattle, sheep, poultry, and swine production.
66GF Score
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