ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. HMS Hydraulic Machines & Systems Group's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2021 was 7.37%.
HMS Hydraulic Machines & Systems Group (LSE:HMSG) 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, HMS Hydraulic Machines & Systems Group's WACC % is 0.00%. HMS Hydraulic Machines & Systems Group's ROIC % is 0.00% (calculated using TTM income statement data).
HMS Hydraulic Machines & Systems Group 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.
HMS Hydraulic Machines & Systems Group ROIC % Related Terms
HMS Hydraulic Machines & Systems Group ROIC % Historical 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.
HMS Hydraulic Machines & Systems Group ROIC % Chart
HMS Hydraulic Machines & Systems Group Annual Data
For the Specialty Industrial Machinery subindustry, HMS Hydraulic Machines & Systems Group'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.
HMS Hydraulic Machines & Systems Group ROIC % vs Industrial Products Industry
Note:
The Operating Income data used here is two times the semi-annual (Dec. 2021) 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.
HMS Hydraulic Machines & Systems Group (LSE:HMSG) has a ROIC % of 7.37% as of Dec. 2021. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on HMS Hydraulic Machines & Systems Group and its competitors.
Is HMS Hydraulic Machines & Systems Group's ROIC % too high?
HMS Hydraulic Machines & Systems Group's current ROIC % is 7.37%. The Industrial Products industry median ROIC % is 5.21. HMS Hydraulic Machines & Systems Group's value of 7.37% is 41.5% above this industry median. Overall, HMS Hydraulic Machines & Systems Group has a GF Score™ of 8/100, reflecting its overall financial health beyond just this single metric.
How does HMS Hydraulic Machines & Systems Group's ROIC % compare to HON and MMM?
HMS Hydraulic Machines & Systems Group's ROIC % of 7.37% can be compared against companies in the Industrial Products industry. The industry median ROIC % is 5.21. HMS Hydraulic Machines & Systems Group's value of 7.37% is 41.5% 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 an Industrial Products company?
The median ROIC % among Industrial Products companies is 5.21, based on 3,033 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. HMS Hydraulic Machines & Systems Group's current ROIC % of 7.37% is 41.5% 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 HMS Hydraulic Machines & Systems Group and its competitors. For the Industrial Products industry, the median ROIC % is 5.21 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. HMS Hydraulic Machines & Systems Group's current ROIC % is 7.37%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is HMS Hydraulic Machines & Systems Group stock overvalued right now?
HMS Hydraulic Machines & Systems Group (LSE:HMSG) has a current ROIC % of 7.37%. The current ROIC % is 7.37% and 41.5% above the Industrial Products industry median of 5.21. HMS Hydraulic Machines & Systems Group's overall GF Score™ is 8/100. 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 HMS Hydraulic Machines & Systems Group (LSE:HMSG), the current ROIC % is 7.37% as of Dec. 2021. 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.
HMS Hydraulic Machines & Systems Group Business Description
HMS Hydraulic Machines & Systems Group PLC manufactures pump and compressor equipment and provides flow control solutions and related services to oil and gas, power, water supply, and utilities and industrial application industries in Russia and CIS countries and also produces skid-mounted modular oilfield equipment. The company's operating segments are Industrial pumps; Oil and gas equipment & projects; Compressors; and Construction. Its geographical segments are Russia, Ukraine, Germany, Kazakhstan, India, Belarus, Iraq, Iran, Azerbaijan, Egypt, and Others.
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