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 Cato's annualized return on invested capital (ROIC %) for the quarter that ended in Apr. 2026 was 11.57%.
As of today (2026-06-26), The Cato's WACC % is 1.57%. The Cato's ROIC % is 0.00% (calculated using TTM income statement data).
The Cato earns returns that do not match up to its cost of capital. It will destroy value as it grows.
The Cato (NYSE:CATO) 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 Cato's WACC % is 1.57%. The Cato's ROIC % is 0.00% (calculated using TTM income statement data).
The Cato 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 Cato ROIC % Related Terms
The Cato ROIC % Historical Data
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The historical data trend for The Cato'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.
For the Apparel Retail subindustry, The Cato'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 Cato ROIC % vs Retail - Cyclical Industry
For the Retail - Cyclical industry and Consumer Cyclical sector, The Cato's ROIC % distribution charts can be found below:
* The bar in red indicates where The Cato's ROIC % falls into.
Note:
The Operating Income data used here is four times the quarterly (Apr. 2026) data.
The tax rate is limited to between 0% and 100%.
* 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 Cato (CATO) has a ROIC % of 11.57% as of Apr. 2026. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on The Cato and its competitors.
Is The Cato's ROIC % too high?
The Cato's current ROIC % is 11.57%. The Retail - Cyclical industry median ROIC % is 4.37. The Cato's value of 11.57% is 164.8% above this industry median. Overall, The Cato has a GF Score™ of 65/100 and is considered Modestly Undervalued, reflecting its overall financial health beyond just this single metric.
How does The Cato's ROIC % compare to DXLG and BRIA?
The Cato's ROIC % of 11.57% can be compared against companies in the Retail - Cyclical industry. The industry median ROIC % is 4.37. The Cato's value of 11.57% is 164.8% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROIC % for a Retail - Cyclical company?
The median ROIC % among Retail - Cyclical companies is 4.37, based on 1,113 companies in the industry. Companies in the top quartile (top 25%) have a ROIC % significantly above this median, while those in the bottom quartile fall well below. However, ROIC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. The Cato's current ROIC % of 11.57% is 164.8% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROIC % mean?
A high ROIC % can signal that a stock is expensive relative to its fundamentals. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on The Cato and its competitors. For the Retail - Cyclical industry, the median ROIC % is 4.37 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. The Cato's current ROIC % is 11.57%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is The Cato stock overvalued right now?
Based on GuruFocus' analysis, The Cato (CATO) is currently considered Modestly Undervalued. The stock's GF Value™ is $4.19, compared to a current price of $3.34 — trading 20.3% below its estimated fair value. The current ROIC % is 11.57% and 164.8% above the Retail - Cyclical industry median of 4.37. The Cato's overall GF Score™ is 65/100 with 2 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROIC % calculated?
ROIC % is calculated from a company's financial statements. For The Cato (CATO), the current ROIC % is 11.57% as of Apr. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is The Cato (CATO) Overvalued in 2026?
Based on GuruFocus' analysis, The Cato stock appears to be undervalued.
The current stock price of $3.34 is trading 20.3% below its estimated GF Value™ of $4.19.
GuruFocus considers The Cato to be Modestly Undervalued.
Key valuation signals for CATO:
ROIC %: 11.57%
GF Value™: $4.19 vs. price of $3.34 (20.3% below fair value)
Industry Position: 164.8% above the Retail - Cyclical median
No single metric tells the full story. See the CATO stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
The Cato Corp seeks to offer quality fashion apparel and accessories at low prices every day, in junior/missy and plus sizes. The Cato concept's stores and e-commerce website feature a broad assortment of apparel and accessories, including dressy, career, and casual sportswear, dresses, coats, shoes, lingerie, costume jewelry, and handbags. Management believes the Company's success is dependent upon its ability to differentiate its stores from department stores, mass merchandise discount stores, and competing specialty stores. The key elements of the Company's business are: Merchandise Assortment, Value Pricing, Strip Shopping Center Location, Customer Service, Credit and Layaway Programs.
65GF Score
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