ErreDue SpA (MIL:RDUE) ROC % : 19.04% (As of Dec. 2023)

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What is ErreDue SpA ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. ErreDue SpA's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 19.04%.

As of today (2024-05-26), ErreDue SpA's WACC % is 9.32%. ErreDue SpA's ROC % is 19.93% (calculated using TTM income statement data). ErreDue SpA 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.

ErreDue SpA ROC % Historical Data

The historical data trend for ErreDue SpA's ROC % 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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ErreDue SpA ROC % Chart

ErreDue SpA Annual Data

Trend

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

14.97

14.09

22.10

16.16

20.94

ErreDue SpA Semi-Annual Data
	Dec19	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROC %	Get a 7-Day Free Trial			32.29	14.98	18.29	19.95	19.04

ErreDue SpA ROC % Calculation

ErreDue SpA's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	4.311 * ( 1 - 24.07% )	/	( (13.15	+	18.118)	/ 2 )
=	3.2733423	/	15.634
=	20.94 %

where

	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	))
=	35.116	-	2.935	-	( 19.031	-	max(0, 5.967	-	26.734	+	19.031	))
=	13.15

	Invested Capital		(A: Dec. 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	))
=	40.713	-	3.558	-	( 19.037	-	max(0, 6.583	-	29.391	+	19.037	))
=	18.118

ErreDue SpA's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	4.494 * ( 1 - 23.5% )	/	( (18	+	18.118)	/ 2 )
=	3.43791	/	18.059
=	19.04 %

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	))
=	39.173	-	3.005	-	( 18.168	-	max(0, 6.735	-	27.833	+	18.168	))
=	18

	Invested Capital		(Q: Dec. 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	))
=	40.713	-	3.558	-	( 19.037	-	max(0, 6.583	-	29.391	+	19.037	))
=	18.118

Note: The Operating Income data used here is two times the semi-annual (Dec. 2023) data.

ErreDue SpA (MIL:RDUE) 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, ErreDue SpA's WACC % is 9.32%. ErreDue SpA's ROC % is 19.93% (calculated using TTM income statement data). ErreDue SpA 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.

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.

ErreDue SpA ROC % Related Terms

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ErreDue SpA (MIL:RDUE) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Industrial Products » ErreDue SpA (MIL:RDUE) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

N/A

Address

Via G. Gozzano, 3, Livorno, ITA, 57121

Website

https://www.erreduegas.it

ErreDue SpA designs manufacture and markets solutions for the on-site production, blending, and purification of technical gases (hydrogen produced by electrolysis of water, nitrogen, and oxygen) intended for use in small, medium, and large industrial sites, laboratories, medical applications, applications related to the energy transition. Its range of products comprises High purity Hydrogen generators, High purity Nitrogen generators, Oxygen generators, and Purification systems for Nitrogen, Hydrogen, Oxygen, and complex gas mixtures.

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