ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Deutsche Telekom AG's annualized return on invested capital (ROIC %) for the quarter that ended in Sep. 2024 was -23.26%.
As of today (2024-12-12), Deutsche Telekom AG's WACC % is 4.22%. Deutsche Telekom AG's ROIC % is 18.93% (calculated using TTM income statement data).
Deutsche Telekom AG 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.
Deutsche Telekom AG ROIC % Historical Data
The historical data trend for Deutsche Telekom AG'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.
Competitive Comparison of Deutsche Telekom AG's ROIC %
For the Telecom Services subindustry, Deutsche Telekom AG'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.
Deutsche Telekom AG's ROIC % Distribution in the Telecommunication Services Industry
For the Telecommunication Services industry and Communication Services sector, Deutsche Telekom AG's ROIC % distribution charts can be found below:
* The bar in red indicates where Deutsche Telekom AG's ROIC % falls into.
Deutsche Telekom AG ROIC % Calculation
Deutsche Telekom AG's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:
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.
Deutsche Telekom AG (LTS:0MPH) 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, Deutsche Telekom AG's WACC % is 4.22%. Deutsche Telekom AG's ROIC % is 18.93% (calculated using TTM income statement data).
Deutsche Telekom AG 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.
Deutsche Telekom AG 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.
Deutsche Telekom AG ROIC % Related Terms
Thank you for viewing the detailed overview of Deutsche Telekom AG's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Deutsche Telekom is the incumbent telecom operator in Germany and remains the dominant player in both mobile and fixed markets. It also owns a controlling stake in T-Mobile US—one of three primary wireless carriers in the United States—which merged with Sprint in 2020, consolidating the market from four to three operators. Aside from its two core markets, Deutsche Telekom also has operations in several Central European countries and holds an IT arm (Systems Solutions).
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
LTS:0MPH has been successfully added to your 