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Roots (TSX:ROOT) ROC % : 5.13% (As of Oct. 2024)


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What is Roots 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 %. Roots's annualized return on capital (ROC %) for the quarter that ended in Oct. 2024 was 5.13%.

As of today (2025-03-24), Roots's WACC % is 5.58%. Roots's ROC % is 2.88% (calculated using TTM income statement data). Roots earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Roots ROC % Historical Data

The historical data trend for Roots'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.

* Premium members only.

Roots ROC % Chart

Roots Annual Data
Trend Jan16 Jan17 Jan18 Jan19 Jan20 Jan21 Jan22 Jan23 Jan24
ROC %
Get a 7-Day Free Trial Premium Member Only -2.65 4.57 8.31 3.82 2.57

Roots Quarterly Data
Jan20 Apr20 Jul20 Oct20 Jan21 Apr21 Jul21 Oct21 Jan22 Apr22 Jul22 Oct22 Jan23 Apr23 Jul23 Oct23 Jan24 Apr24 Jul24 Oct24
ROC % Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 2.69 19.79 -9.10 -4.56 5.13

Roots ROC % Calculation

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

ROC % (A: Jan. 2024 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Jan. 2023 ) + Invested Capital (A: Jan. 2024 ))/ count )
=12.125 * ( 1 - 30.7% )/( (329.257 + 324.543)/ 2 )
=8.402625/326.9
=2.57 %

where

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

ROC % (Q: Oct. 2024 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Jul. 2024 ) + Invested Capital (Q: Oct. 2024 ))/ count )
=22.592 * ( 1 - 26.66% )/( (318.968 + 327.094)/ 2 )
=16.5689728/323.031
=5.13 %

where

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


Roots  (TSX:ROOT) 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, Roots's WACC % is 5.58%. Roots's ROC % is 2.88% (calculated using TTM income statement data). Roots 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.


Roots ROC % Related Terms

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Roots Business Description

Traded in Other Exchanges
Address
1400 Castlefield Avenue, Toronto, ON, CAN, M6B 4C4
Roots Corp provides a portfolio of apparel, leather goods, accessories, and footwear for men, women, and children under the Roots brand. Its merchandise includes genuine leather, such as jackets, bags, and luggage; kids & baby clothing; and leather, linens, towels, and accessories. The company operates through two segments: Direct-To-Consumer, which accounts for the majority of revenue, and Partners & Other. The DTC segment sells products through the company's corporate retail stores and e-commerce. The Partners & Other segment engage in the wholesale of Roots-branded products to the company's international operating partner, and it earns royalties on the retail sales of Roots-branded products. The company has operating stores in Canada, the United States, Taiwan, China, and Hong Kong.
Executives
Edward Hume Kernaghan 10% Security Holder
Mary Ann Curran Director
Meghan Claire Roach Director, Senior Officer
Liguang (leon) Wu Senior Officer
L.p. Searchlight Capital Partners 10% Security Holder