ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Great-West Lifeco's annualized return on invested capital (ROIC %) for the quarter that ended in Sep. 2024 was 0.52%.
As of today (2024-12-12), Great-West Lifeco's WACC % is 7.30%. Great-West Lifeco's ROIC % is 0.58% (calculated using TTM income statement data).
Great-West Lifeco earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Great-West Lifeco ROIC % Historical Data
The historical data trend for Great-West Lifeco'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 Great-West Lifeco's ROIC %
For the Insurance - Life subindustry, Great-West Lifeco'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.
Great-West Lifeco's ROIC % Distribution in the Insurance Industry
For the Insurance industry and Financial Services sector, Great-West Lifeco's ROIC % distribution charts can be found below:
* The bar in red indicates where Great-West Lifeco's ROIC % falls into.
Great-West Lifeco ROIC % Calculation
Great-West Lifeco's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:
Note:
The EBIT 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.
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, Great-West Lifeco's WACC % is 7.30%. Great-West Lifeco's ROIC % is 0.58% (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.
Great-West Lifeco ROIC % Related Terms
Thank you for viewing the detailed overview of Great-West Lifeco's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Great-West Lifeco provides life insurance, health insurance, retirement products, asset management, recordkeeping services, and reinsurance products in Canada, the United States, and Europe. The Canada business contributes approximately 31% of adjusted earnings and has leading market positions in group insurance, group retirement, and individual insurance. The company operates the second-largest recordkeeping business under the Empower brand in the United States, with an earnings contribution from the country approximating 26%. Great-West Lifeco also offers various products across Europe markets with a strong presence in the UK, Ireland, and Germany. The Europe segment contributed around 21% of adjusted earnings and the reinsurance business accounts for around 22% of adjusted earnings.
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