Constellation Brands (STU:CB1A) ROC % : 15.88% (As of Aug. 2024)

Constellation Brands ROC % Chart

Constellation Brands Annual Data
	Trend	Feb15	Feb16	Feb17	Feb18	Feb19	Feb20	Feb21	Feb22	Feb23	Feb24
ROC %		Get a 7-Day Free Trial					-0.22	8.15	0.04	-1.25	10.70

Constellation Brands Quarterly Data
	Nov19	Feb20	May20	Aug20	Nov20	Feb21	May21	Aug21	Nov21	Feb22	May22	Aug22	Nov22	Feb23	May23	Aug23	Nov23	Feb24	May24	Aug24
ROC %	Get a 7-Day Free Trial															14.11	11.13	8.83	15.21	15.88

Constellation Brands ROC % Calculation

Constellation Brands's annualized Return on Capital (ROC %) for the fiscal year that ended in Feb. 2024 is calculated as:

where

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

where

Note: The Operating Income data used here is four times the quarterly (Aug. 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.

Constellation Brands  (STU:CB1A) 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, Constellation Brands's WACC % is 7.16%. Constellation Brands's ROC % is 12.83% (calculated using TTM income statement data). Constellation Brands 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.

Constellation Brands ROC % Related Terms

Thank you for viewing the detailed overview of Constellation Brands's ROC % provided by GuruFocus.com. Please click on the following links to see related term pages.

Constellation Brands Business Description