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The Home Depot (BSP:HOME34) ROIC % : 20.64% (As of Oct. 2024)


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What is The Home Depot ROIC %?

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The Home Depot's annualized return on invested capital (ROIC %) for the quarter that ended in Oct. 2024 was 20.64%.

As of today (2024-12-12), The Home Depot's WACC % is 9.84%. The Home Depot's ROIC % is 23.96% (calculated using TTM income statement data). The Home Depot 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.


The Home Depot ROIC % Historical Data

The historical data trend for The Home Depot's ROIC % 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.

The Home Depot ROIC % Chart

The Home Depot Annual Data
Trend Jan15 Jan16 Jan17 Jan18 Jan19 Jan20 Jan21 Jan22 Jan23 Jan24
ROIC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 37.89 36.48 36.10 33.31 27.57

The Home Depot Quarterly Data
Jan20 Apr20 Jul20 Oct20 Jan21 Apr21 Jul21 Oct21 Jan22 Apr22 Jul22 Oct22 Jan23 Apr23 Jul23 Oct23 Jan24 Apr24 Jul24 Oct24
ROIC % 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 30.96 21.48 26.53 29.04 20.64

Competitive Comparison of The Home Depot's ROIC %

For the Home Improvement Retail subindustry, The Home Depot's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


The Home Depot's ROIC % Distribution in the Retail - Cyclical Industry

For the Retail - Cyclical industry and Consumer Cyclical sector, The Home Depot's ROIC % distribution charts can be found below:

* The bar in red indicates where The Home Depot's ROIC % falls into.



The Home Depot ROIC % Calculation

The Home Depot's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Jan. 2024 is calculated as:

ROIC % (A: Jan. 2024 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Jan. 2023 ) + Invested Capital (A: Jan. 2024 ))/ count )
=106670.84 * ( 1 - 24% )/( (289818.22 + 298224.893)/ 2 )
=81069.8384/294021.5565
=27.57 %

where

Invested Capital(A: Jan. 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))
=396917.729 - 92784.614 - ( 14314.895 - max(0, 119991.742 - 168595.926+14314.895))
=289818.22

Invested Capital(A: Jan. 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))
=376389.846 - 59672.521 - ( 18492.432 - max(0, 108274.173 - 146439.405+18492.432))
=298224.893

The Home Depot's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Oct. 2024 is calculated as:

ROIC % (Q: Oct. 2024 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Jul. 2024 ) + Invested Capital (Q: Oct. 2024 ))/ count )
=121965.68 * ( 1 - 24.36% )/( (443071.584 + 450972.497)/ 2 )
=92254.840352/447022.0405
=20.64 %

where

Invested Capital(Q: Jul. 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))
=536894.855 - 84881.122 - ( 8942.149 - max(0, 155908.287 - 178915.057+8942.149))
=443071.584

Invested Capital(Q: Oct. 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))
=547382.339 - 87793.68 - ( 8616.162 - max(0, 163723.958 - 185430.382+8616.162))
=450972.497

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.


The Home Depot  (BSP:HOME34) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. 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 ROIC % 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, The Home Depot's WACC % is 9.84%. The Home Depot's ROIC % is 23.96% (calculated using TTM income statement data). The Home Depot 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. The Home Depot 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 %, ROIC % 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.


The Home Depot ROIC % Related Terms

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The Home Depot Business Description

Address
2455 Paces Ferry Road, Atlanta, GA, USA, 30339
Home Depot is the world's largest home improvement specialty retailer, operating more than 2,300 warehouse-format stores offering more than 30,000 products in store and 1 million products online in the US, Canada, and Mexico. Its stores offer numerous building materials, home improvement products, lawn and garden products, and decor products and provide various services, including home improvement installation services and tool and equipment rentals. The acquisition of Interline Brands in 2015 allowed Home Depot to enter the MRO business, which has been expanded through the tie-up with HD Supply (2020). The additions of the Company Store brought textiles to the lineup, and the recent tie-up with SRS will help grow professional demand in roofing, pool and landscaping projects.

The Home Depot Headlines

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