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Tesco (TSCDY) ROIC % : 5.91% (As of Aug. 2024)


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What is Tesco 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 %. Tesco's annualized return on invested capital (ROIC %) for the quarter that ended in Aug. 2024 was 5.91%.

As of today (2024-12-14), Tesco's WACC % is 8.05%. Tesco's ROIC % is 5.45% (calculated using TTM income statement data). Tesco earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Tesco ROIC % Historical Data

The historical data trend for Tesco'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.

* Premium members only.

Tesco ROIC % Chart

Tesco Annual Data
Trend Feb15 Feb16 Feb17 Feb18 Feb19 Feb20 Feb21 Feb22 Feb23 Feb24
ROIC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 3.13 3.69 4.41 2.31 5.29

Tesco Semi-Annual Data
Feb15 Aug15 Feb16 Aug16 Feb17 Aug17 Feb18 Aug18 Feb19 Aug19 Feb20 Aug20 Feb21 Aug21 Feb22 Aug22 Feb23 Aug23 Feb24 Aug24
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 1.91 2.92 5.25 5.09 5.91

Competitive Comparison of Tesco's ROIC %

For the Grocery Stores subindustry, Tesco'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.


Tesco's ROIC % Distribution in the Retail - Defensive Industry

For the Retail - Defensive industry and Consumer Defensive sector, Tesco's ROIC % distribution charts can be found below:

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



Tesco ROIC % Calculation

Tesco's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Feb. 2024 is calculated as:

ROIC % (A: Feb. 2024 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Feb. 2023 ) + Invested Capital (A: Feb. 2024 ))/ count )
=3473.485 * ( 1 - 22.94% )/( (49793.478 + 51313.131)/ 2 )
=2676.667541/50553.3045
=5.29 %

where

Invested Capital(A: Feb. 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))
=55396.135 - 11811.594 - ( 5264.493 - max(0, 21268.116 - 15059.179+5264.493))
=49793.478

Invested Capital(A: Feb. 2024 )
=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))
=59392.677 - 12960.859 - ( 5863.636 - max(0, 25848.485 - 20967.172+5863.636))
=51313.131

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

ROIC % (Q: Aug. 2024 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Feb. 2024 ) + Invested Capital (Q: Aug. 2024 ))/ count )
=4196.892 * ( 1 - 26.58% )/( (51313.131 + 52911.917)/ 2 )
=3081.3581064/52112.524
=5.91 %

where

Invested Capital(Q: Feb. 2024 )
=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))
=59392.677 - 12960.859 - ( 5863.636 - max(0, 25848.485 - 20967.172+5863.636))
=51313.131

Invested Capital(Q: Aug. 2024 )
=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))
=61603.627 - 14129.534 - ( 6943.005 - max(0, 28522.021 - 23084.197+6943.005))
=52911.917

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


Tesco  (OTCPK:TSCDY) 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, Tesco's WACC % is 8.05%. Tesco's ROIC % is 5.45% (calculated using TTM income statement data).


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.


Tesco ROIC % Related Terms

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Tesco Business Description

Address
Kestrel Way, Tesco House, Shire Park, Welwyn Garden, GBR, AL7 1GA
Tesco is one of the largest food retailers in the world, operating thousands of stores in the United Kingdom, Ireland, and Europe. It recently sold its Asia business. According to Kantar, Tesco is the market leader in the UK with a share around 27%, roughly double that of Asda or Sainsbury's. Tesco operates a core supermarket business in addition to convenience and neighborhood outlets. With a 35% digital market share in the UK, the company holds a dominant position online. Tesco gained exposure to the cash-and-carry and out-of-home delivering industries with the landmark GBP 4 billion acquisition of Booker in 2018.

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