Neo Performance Materials (TSX:NEO) ROC % : -18.16% (As of Sep. 2024)

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What is Neo Performance Materials 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 %. Neo Performance Materials's annualized return on capital (ROC %) for the quarter that ended in Sep. 2024 was -18.16%.

As of today (2024-12-15), Neo Performance Materials's WACC % is 9.31%. Neo Performance Materials's ROC % is -0.02% (calculated using TTM income statement data). Neo Performance Materials earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Neo Performance Materials ROC % Historical Data

The historical data trend for Neo Performance Materials'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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Neo Performance Materials ROC % Chart

Neo Performance Materials Annual Data

Trend

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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6.65

0.97

12.57

8.22

-2.52

Neo Performance Materials 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															3.26	-3.27	2.21	0.84	-18.16

Neo Performance Materials ROC % Calculation

Neo Performance Materials'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 )
=	17.28 * ( 1 - 189.35% )	/	( (611.111	+	615.685)	/ 2 )
=	-15.43968	/	613.398
=	-2.52 %

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	))
=	918.971	-	107.493	-	( 200.367	-	max(0, 174.76	-	633.625	+	200.367	))
=	611.111

	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	))
=	841.189	-	108.926	-	( 116.578	-	max(0, 164.875	-	507.975	+	116.578	))
=	615.685

Neo Performance Materials'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 )
=	61.996 * ( 1 - 293.2% )	/	( (634.802	+	684.176)	/ 2 )
=	-119.776272	/	659.489
=	-18.16 %

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	))
=	851.837	-	79.323	-	( 137.712	-	max(0, 145.077	-	479.479	+	137.712	))
=	634.802

	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	))
=	866.219	-	94.07	-	( 87.973	-	max(0, 185.254	-	480.466	+	87.973	))
=	684.176

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

Neo Performance Materials (TSX:NEO) 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, Neo Performance Materials's WACC % is 9.31%. Neo Performance Materials's ROC % is -0.02% (calculated using TTM income statement data). Neo Performance Materials 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.

Neo Performance Materials ROC % Related Terms

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Neo Performance Materials Business Description

Industry

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NOPMF:USA N14:Germany

Address

121 King Street West, Suite 1740, Toronto, ON, CAN, M5H 3T9

Website

https://www.neomaterials.com

Neo Performance Materials Inc is engaged in the innovation, development, processing, and manufacturing of rare earth and rare metal-based functional materials. Its operating segments include Magnequench, Chemicals & Oxides, Rare Metals, and Corporate. The Magnequench segment produces magnetic powders used in bonded and hot-deformed, fully dense neodymium-iron-boron magnets. The Chemicals & Oxides segment manufactures and distributes a broad range of industrial materials. The Rare Metals segment produces specialty metals and their compounds, such as tantalum, niobium, hafnium, rhenium, gallium, and indium. Its geographical segments are Asia, North America, Europe, and Others.

Executives

Kevin Morris	Senior Officer
Rahim Suleman	Director, Senior Officer
Jonathan Baksh	Senior Officer
Claire Marie Catherine Kennedy	Director, Senior Officer
Yadin Rozov	Director
Gregory Kroll	Director or Senior Officer of Insider or Subsidiary (other than in 4,5,6)
Constantine Efthymios Karayannopoulos	Director, Senior Officer