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Karat Packaging (FRA:0WJ) ROIC % : 16.28% (As of Sep. 2024)


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What is Karat Packaging 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 %. Karat Packaging's annualized return on invested capital (ROIC %) for the quarter that ended in Sep. 2024 was 16.28%.

As of today (2024-12-15), Karat Packaging's WACC % is 9.52%. Karat Packaging's ROIC % is 14.66% (calculated using TTM income statement data). Karat Packaging 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.


Karat Packaging ROIC % Historical Data

The historical data trend for Karat Packaging'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.

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Karat Packaging ROIC % Chart

Karat Packaging Annual Data
Trend Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
ROIC %
Get a 7-Day Free Trial 4.47 15.85 12.04 12.99 17.07

Karat Packaging Quarterly Data
Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24 Jun24 Sep24
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 17.20 8.47 15.91 17.34 16.28

Competitive Comparison of Karat Packaging's ROIC %

For the Packaging & Containers subindustry, Karat Packaging'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.


Karat Packaging's ROIC % Distribution in the Packaging & Containers Industry

For the Packaging & Containers industry and Consumer Cyclical sector, Karat Packaging's ROIC % distribution charts can be found below:

* The bar in red indicates where Karat Packaging's ROIC % falls into.



Karat Packaging ROIC % Calculation

Karat Packaging's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:

ROIC % (A: Dec. 2023 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2022 ) + Invested Capital (A: Dec. 2023 ))/ count )
=40.899 * ( 1 - 22.81% )/( (192.739 + 177.228)/ 2 )
=31.5699381/184.9835
=17.07 %

where

Karat Packaging's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Sep. 2024 is calculated as:

ROIC % (Q: Sep. 2024 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Jun. 2024 ) + Invested Capital (Q: Sep. 2024 ))/ count )
=40.52 * ( 1 - 21.9% )/( (201.959 + 186.702)/ 2 )
=31.64612/194.3305
=16.28 %

where

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


Karat Packaging  (FRA:0WJ) 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, Karat Packaging's WACC % is 9.52%. Karat Packaging's ROIC % is 14.66% (calculated using TTM income statement data). Karat Packaging 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. Karat Packaging 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.


Karat Packaging ROIC % Related Terms

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Karat Packaging Business Description

Traded in Other Exchanges
Address
6185 Kimball Avenue, Chino, CA, USA, 91708
Karat Packaging Inc is engaged in the manufacturing and distribution of disposable products used in restaurants and food service settings. It offers products for the foodservice industry, including food packaging, containers, tableware, cups, lids, cutlery, and straws. These products are available in plastic, paper, biopolymer-based and other compostable forms. Its product line includes a variety of brands such as Tea Zone, Karat, Karat Earth, and Total Clean.

Karat Packaging Headlines

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