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ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Outset Medical's annualized return on capital (ROC %) for the quarter that ended in Sep. 2024 was -90.28%.
As of today (2024-12-11), Outset Medical's WACC % is 13.77%. Outset Medical's ROC % is -127.49% (calculated using TTM income statement data). Outset Medical earns returns that do not match up to its cost of capital. It will destroy value as it grows.
The historical data trend for Outset Medical'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.
Outset Medical Annual Data | |||||||||||||||
Trend | Dec18 | Dec19 | Dec20 | Dec21 | Dec22 | Dec23 | |||||||||
ROC % | Get a 7-Day Free Trial | -458.52 | -222.81 | -138.34 | -155.10 | -176.90 |
Outset Medical Quarterly Data | ||||||||||||||||||||
Dec19 | Mar20 | Jun20 | Sep20 | Dec20 | Mar21 | Jun21 | Sep21 | Dec21 | Mar22 | Jun22 | Sep22 | Dec22 | Mar23 | Jun23 | Sep23 | Dec23 | Mar24 | Jun24 | Sep24 | |
ROC % | Get a 7-Day Free Trial | -185.29 | -155.81 | -151.40 | -118.62 | -90.28 |
Outset Medical'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 ) |
= | -169.77 * ( 1 - -0.3% ) | / | ( (99.272 | + | 93.24) | / 2 ) |
= | -170.27931 | / | 96.256 | |||
= | -176.90 % |
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 | )) |
= | 400.115 | - | 13.341 | - | ( 287.502 | - | max(0, 51.949 | - | 373.645 | + | 287.502 | )) |
= | 99.272 |
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 | )) |
= | 313.801 | - | 17.237 | - | ( 203.324 | - | max(0, 55.323 | - | 291.219 | + | 203.324 | )) |
= | 93.24 |
Outset Medical's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2024 is calculated as:
ROC % (Q: Sep. 2024 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (Q: Jun. 2024 ) | + | Invested Capital (Q: Sep. 2024 )) | / count ) |
= | -95.356 * ( 1 - -0.66% ) | / | ( (105.784 | + | 106.852) | / 2 ) |
= | -95.9853496 | / | 106.318 | |||
= | -90.28 % |
where
Invested Capital | (Q: Jun. 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 | )) |
= | 314.534 | - | 13.902 | - | ( 194.848 | - | max(0, 43.433 | - | 295.137 | + | 194.848 | )) |
= | 105.784 |
Invested Capital | (Q: Sep. 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 | )) |
= | 292.89 | - | 10.405 | - | ( 175.633 | - | max(0, 42.43 | - | 275.273 | + | 175.633 | )) |
= | 106.852 |
Note: The Operating Income data used here is four times the quarterly (Sep. 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.
Outset Medical (NAS:OM) 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, Outset Medical's WACC % is 13.77%. Outset Medical's ROC % is -127.49% (calculated using TTM income statement data). Outset Medical 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.
Thank you for viewing the detailed overview of Outset Medical's ROC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Leslie Trigg | director, officer: President & CEO | C/O OUTSET MEDICAL, 1830 BERING ROAD, SAN JOSE CA 95112 |
Marc Nash | officer: SVP, Operations and R&D | 3052 ORCHARD DRIVE, SAN JOSE CA 95134 |
Nabeel Ahmed | officer: Interim CFO | 3052 ORCHARD DRIVE, SAN JOSE CA 95134 |
John L. Brottem | officer: General Counsel | 3052 ORCHARD DR., SAN JOSE CA 95134 |
D Keith Grossman | director | |
Jean-olivier Racine | officer: Chief Technology Officer | 3052 ORCHARD DRIVE, SAN JOSE CA 95134 |
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Stacey L. Porter | officer: Chief People Officer | 3052 ORCHARD DRIVE, SAN JOSE CA 95134 |
Martin Vazquez | officer: Chief Operating Officer | 3052 ORCHARD DR., SAN JOSE CA 95134 |
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