Valtecne SPA (MIL:VLT) ROIC % : 23.40% (As of Jun. 2023)

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What is Valtecne SPA 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 %. Valtecne SPA's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2023 was 23.40%.

As of today (2024-05-14), Valtecne SPA's WACC % is 8.71%. Valtecne SPA's ROIC % is 17.02% (calculated using TTM income statement data). Valtecne SPA 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.

Valtecne SPA ROIC % Historical Data

The historical data trend for Valtecne SPA'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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Valtecne SPA ROIC % Chart

Valtecne SPA Annual Data

Trend

Dec20

Dec21

Dec22

ROIC %

10.59

15.18

13.68

Valtecne SPA Semi-Annual Data
	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23
ROIC %	Get a 7-Day Free Trial			17.66	13.87	18.77	9.70	23.40

Competitive Comparison of Valtecne SPA's ROIC %

For the Specialty Industrial Machinery subindustry, Valtecne SPA'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.

Valtecne SPA's ROIC % Distribution in the Industrial Products Industry

For the Industrial Products industry and Industrials sector, Valtecne SPA's ROIC % distribution charts can be found below:

* The bar in red indicates where Valtecne SPA's ROIC % falls into.

Valtecne SPA ROIC % Calculation

Valtecne SPA's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2022 is calculated as:

	ROIC % (A: Dec. 2022 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2021 )	+	Invested Capital (A: Dec. 2022 ))	/ count )
=	3.132 * ( 1 - 24.02% )	/	( (15.266	+	19.524)	/ 2 )
=	2.3796936	/	17.395
=	13.68 %

where

	Invested Capital		(A: Dec. 2021 )
=	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	))
=	22.086	-	5.553	-	( 1.267	-	max(0, 8.38	-	15.792	+	1.267	))
=	15.266

	Invested Capital		(A: Dec. 2022 )
=	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	))
=	28.045	-	7.949	-	( 0.572	-	max(0, 11.675	-	20.652	+	0.572	))
=	19.524

Valtecne SPA's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jun. 2023 is calculated as:

	ROIC % (Q: Jun. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2022 )	+	Invested Capital (Q: Jun. 2023 ))	/ count )
=	6.584 * ( 1 - 27.11% )	/	( (19.524	+	21.485)	/ 2 )
=	4.7990776	/	20.5045
=	23.40 %

where

	Invested Capital		(Q: Dec. 2022 )
=	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	))
=	28.045	-	7.949	-	( 0.572	-	max(0, 11.675	-	20.652	+	0.572	))
=	19.524

	Invested Capital		(Q: Jun. 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	))
=	37.345	-	9.504	-	( 6.356	-	max(0, 13.3	-	29.22	+	6.356	))
=	21.485

Note: The Operating Income data used here is two times the semi-annual (Jun. 2023) data.

Valtecne SPA (MIL:VLT) 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, Valtecne SPA's WACC % is 8.71%. Valtecne SPA's ROIC % is 17.02% (calculated using TTM income statement data). Valtecne SPA 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. Valtecne SPA 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.

Valtecne SPA ROIC % Related Terms

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