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ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Ericsson Nikola Tesla DD's annualized return on invested capital (ROIC %) for the quarter that ended in Mar. 2026 was 27.64%.
As of today (2026-07-27), Ericsson Nikola Tesla DD's WACC % is 10.24%. Ericsson Nikola Tesla DD's ROIC % is 21.58% (calculated using TTM income statement data).
Ericsson Nikola Tesla DD 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.
Ericsson Nikola Tesla DD (ZAG:ERNT) 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, Ericsson Nikola Tesla DD's WACC % is 10.24%. Ericsson Nikola Tesla DD's ROIC % is 21.58% (calculated using TTM income statement data).
Ericsson Nikola Tesla DD 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.
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.
* 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.
For the Telecom Services subindustry, Ericsson Nikola Tesla DD'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.
Ericsson Nikola Tesla DD ROIC % vs Telecommunication Services Industry
For the Telecommunication Services industry and Communication Services sector, Ericsson Nikola Tesla DD's ROIC % distribution charts can be found below:
* The bar in red indicates where Ericsson Nikola Tesla DD's ROIC % falls into.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* 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.
Ericsson Nikola Tesla DD (ZAG:ERNT) has a ROIC % of 27.64% as of Mar. 2026. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Ericsson Nikola Tesla DD and its competitors.
Is Ericsson Nikola Tesla DD's ROIC % too high?
Ericsson Nikola Tesla DD's current ROIC % is 27.64%. The Telecommunication Services industry median ROIC % is 4.54. Ericsson Nikola Tesla DD's value of 27.64% is 508.8% above this industry median. Overall, Ericsson Nikola Tesla DD has a GF Score™ of 76/100 and is considered Modestly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Ericsson Nikola Tesla DD's ROIC % compare to VZ and TMUS?
Ericsson Nikola Tesla DD's ROIC % of 27.64% can be compared against companies in the Telecommunication Services industry. The industry median ROIC % is 4.54. Ericsson Nikola Tesla DD's value of 27.64% is 508.8% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROIC % for a Telecommunication Services company?
The median ROIC % among Telecommunication Services companies is 4.54, based on 361 companies in the industry. Companies in the top quartile (top 25%) have a ROIC % significantly above this median, while those in the bottom quartile fall well below. However, ROIC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Ericsson Nikola Tesla DD's current ROIC % of 27.64% is 508.8% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROIC % mean?
A high ROIC % can signal that a stock is expensive relative to its fundamentals. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Ericsson Nikola Tesla DD and its competitors. For the Telecommunication Services industry, the median ROIC % is 4.54 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Ericsson Nikola Tesla DD's current ROIC % is 27.64%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Ericsson Nikola Tesla DD stock overvalued right now?
Based on GuruFocus' analysis, Ericsson Nikola Tesla DD (ZAG:ERNT) is currently considered Modestly Overvalued. The stock's GF Value™ is €183.57, compared to a current price of €204.00 — trading 11.1% above its estimated fair value. The current ROIC % is 27.64% and 508.8% above the Telecommunication Services industry median of 4.54. Ericsson Nikola Tesla DD's overall GF Score™ is 76/100 with 4 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROIC % calculated?
ROIC % is calculated from a company's financial statements. For Ericsson Nikola Tesla DD (ZAG:ERNT), the current ROIC % is 27.64% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Ericsson Nikola Tesla DD (ZAG:ERNT) Overvalued in 2026?
Based on GuruFocus' analysis, Ericsson Nikola Tesla DD stock appears to be overvalued.
The current stock price of €204.00 is trading 11.1% above its estimated GF Value™ of €183.57.
GuruFocus considers Ericsson Nikola Tesla DD to be Modestly Overvalued.
Key valuation signals for ZAG:ERNT:
ROIC %: 27.64%
GF Value™: €183.57 vs. price of €204.00 (11.1% above fair value)
Industry Position: 508.8% above the Telecommunication Services median
No single metric tells the full story. See the ZAG:ERNT stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Ericsson Nikola Tesla DD is a provider of communication products and services and ICT solutions related to healthcare, national and public safety, state administration, transport, utilities, and multimedia communication. The company's principal activities include research and development of telecommunications software and services, design, testing, and integration of total communications solutions, managed services, supply, and maintenance of communications solutions and ICT solutions, towards customers within the Ericsson Group, customers in the Republic of Croatia, and Bosnia and Herzegovina, and several customers in Central and Eastern Europe. The company operates in four segments Networks, Digital Services, Managed Services, and Others. It earns maximum revenue from Networks segment.
76GF Score
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