AXT (STU:AHV) ROC % : -3.70% (As of Mar. 2024)

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What is AXT 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 %. AXT's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was -3.70%.

As of today (2024-06-04), AXT's WACC % is 12.94%. AXT's ROC % is -5.79% (calculated using TTM income statement data). AXT earns returns that do not match up to its cost of capital. It will destroy value as it grows.

AXT ROC % Historical Data

The historical data trend for AXT'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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AXT ROC % Chart

AXT Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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0.47

2.84

5.82

4.64

-6.31

AXT Quarterly Data
	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
ROC %	Get a 7-Day Free Trial															-5.37	-8.83	-9.14	-1.45	-3.70

AXT ROC % Calculation

AXT'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 )
=	-17.434 * ( 1 - -0.84% )	/	( (286.433	+	270.45)	/ 2 )
=	-17.5804456	/	278.4415
=	-6.31 %

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	))
=	349.348	-	21.108	-	( 41.807	-	max(0, 71.108	-	173.266	+	41.807	))
=	286.433

	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	))
=	328.929	-	21.898	-	( 36.581	-	max(0, 74.788	-	156.492	+	36.581	))
=	270.45

AXT's annualized Return on Capital (ROC %) for the quarter that ended in Mar. 2024 is calculated as:

	ROC % (Q: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	-8.796 * ( 1 - -15.44% )	/	( (270.45	+	278.54)	/ 2 )
=	-10.1541024	/	274.495
=	-3.70 %

where

	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	))
=	328.929	-	21.898	-	( 36.581	-	max(0, 74.788	-	156.492	+	36.581	))
=	270.45

	Invested Capital		(Q: Mar. 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	))
=	321.047	-	17.244	-	( 25.263	-	max(0, 66.246	-	150.643	+	25.263	))
=	278.54

Note: The Operating Income data used here is four times the quarterly (Mar. 2024) data.

AXT (STU:AHV) 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, AXT's WACC % is 12.94%. AXT's ROC % is -5.79% (calculated using TTM income statement data). AXT 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.

AXT ROC % Related Terms

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AXT (STU:AHV) Business Description

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GURUFOCUS.COM » STOCK LIST » Technology » Semiconductors » AXT Inc (STU:AHV) » Definitions » ROC %

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AXTI:USA AHV:Germany

Address

4281 Technology Drive, Fremont, CA, USA, 94538

Website

http://www.axt.com

AXT Inc is a developer and producer of compound and single-element semiconductor substrates, also known as wafers. The dominant substrates used in producing semiconductor chips and other electronic circuits are made from silicon. It is engaged in the design, development, manufacture, and distribution of high-performance compound semiconductor substrates and the sale of materials. The company provides alternative or specialty materials in the form of substrates or wafers, including compound and single-element substrates. Its compound substrates combine indium with phosphorous or gallium with arsenic. Geographically firm has its business presence across the region of Europe, Japan, Taiwan, China, North America, and the Asia Pacific from which China derives its maximum revenue to the company.

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