ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Perma-Pipe International Holdings's annualized return on invested capital (ROIC %) for the quarter that ended in Jul. 2024 was 16.99%.
As of today (2024-12-12), Perma-Pipe International Holdings's WACC % is 5.70%. Perma-Pipe International Holdings's ROIC % is 21.99% (calculated using TTM income statement data).
Perma-Pipe International Holdings 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.
Perma-Pipe International Holdings 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.
Competitive Comparison of Perma-Pipe International Holdings's ROIC %
For the Building Products & Equipment subindustry, Perma-Pipe International Holdings'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.
Perma-Pipe International Holdings's ROIC % Distribution in the Construction Industry
For the Construction industry and Industrials sector, Perma-Pipe International Holdings's ROIC % distribution charts can be found below:
* The bar in red indicates where Perma-Pipe International Holdings's ROIC % falls into.
Perma-Pipe International Holdings ROIC % Calculation
Perma-Pipe International Holdings's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Jan. 2024 is calculated as:
Note:
The Operating Income data used here is four times the quarterly (Jul. 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.
Perma-Pipe International Holdings (NAS:PPIH) 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, Perma-Pipe International Holdings's WACC % is 5.70%. Perma-Pipe International Holdings's ROIC % is 21.99% (calculated using TTM income statement data).
Perma-Pipe International Holdings 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.
Perma-Pipe International Holdings 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.
Perma-Pipe International Holdings ROIC % Related Terms
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Perma-Pipe International Holdings Business Description
Perma-Pipe International Holdings Inc is engaged in the manufacture and sale of products in the reportable segment of Piping Systems. The company engineers, designs, manufactures and sells specialty piping systems and leak detection systems. Specialty piping systems include insulated and jacketed district heating and cooling piping systems for efficient energy distribution from central energy plants to multiple locations, primary and secondary containment piping systems for transporting chemicals, hazardous fluids and petroleum products, and the coating and insulation of oil and gas gathering and transmission pipelines. It operates in the United States, Canada, Middle East, Europe, India and other countries.
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