Return on Invested Capital (ROIC)

ROIC measures how efficiently a company generates profit from its total invested capital (equity + debt). It is one of the most important quality metrics in stock valuation because companies that consistently earn ROIC above their WACC create economic value.

Formel

Beispiel

A company with $500M in NOPAT and $3B in invested capital has an ROIC of 16.7%. If its WACC is 9%, the spread of 7.7% means every dollar invested creates significant value — a key signal in stock valuation that quality investors seek.

Warum es wichtig ist

ROIC vs. WACC spread is one of the most predictive indicators of long-term stock performance. In stock valuation, high and improving ROIC justifies higher growth assumptions and premium multiples. It separates value-creating businesses from value-destroying ones.

Wie MiniValuator Return on Invested Capital (ROIC) verwendet

MiniValuator reads ROIC as a core quality signal. A business that consistently earns a high ROIC is one whose growth actually creates value, which is what the quality side of a verdict looks for. It informs the quality read, not the discount rate.

In der Praxis

• Wie das DCF-Modell den inneren Wert berechnet
• Analyse des inneren Werts im Sektor Technology
• Analyse des inneren Werts im Sektor Healthcare

Verwandte Begriffe

• Free Cash Flow (FCF) — Free Cash Flow (FCF) is the cash a company generates from its core business operations after funding...
• Discounted Cash Flow (DCF) — Discounted Cash Flow (DCF) is a fundamental stock valuation methodology that estimates the present v...
• Return on Equity (ROE) — Return on Equity (ROE) measures how much net profit a company generates per dollar of shareholders' ...
• Weighted Average Cost of Capital (WACC) — WACC is the blended rate of return that a company must earn on its invested capital to satisfy all o...

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