Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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Return on Invested Capital (ROIC)
O’Reilly Automotive Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2021 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes exhibited a consistent upward trend over the analyzed period. Starting from approximately 1.24 billion US dollars at the end of 2017, it increased steadily each year to reach about 2.36 billion US dollars by the end of 2021. This represents a near doubling of profit within five years, signifying strong operational performance improvement.
- Invested Capital
- The invested capital showed moderate growth initially, increasing from approximately 5.44 billion US dollars in 2017 to about 6.20 billion US dollars in 2020. However, in 2021, there was a noticeable decline to roughly 5.77 billion US dollars, which suggests a reduction in capital deployment or asset base in the latest period analyzed.
- Return on Invested Capital (ROIC)
- The return on invested capital demonstrated a positive and accelerating trend throughout the years. Starting at 22.83% in 2017, ROIC rose to 26.99% in 2018 and remained relatively stable around 26% in 2019. A significant increase occurred in 2020, when ROIC jumped to 31.51%, followed by another substantial rise to 40.97% in 2021. This sharp increase indicates improved efficiency and effectiveness in generating returns from the invested capital over time.
- Overall Insights
- The simultaneous increase in net operating profit after taxes and the improving return on invested capital suggests enhanced operational efficiency and profitability. The decrease in invested capital during the final year may indicate strategic capital allocation or divestment activities, which, combined with the higher profitability metrics, resulted in better capital utilization. In summary, the data portray a company that has strengthened its profit-generating capacity and leveraged its investments more effectively from 2017 through 2021.
Decomposition of ROIC
O’Reilly Automotive Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × | ||||
| Dec 31, 2018 | = | × | × | ||||
| Dec 31, 2017 | = | × | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
- Operating profit margin (OPM)
- The operating profit margin exhibited a generally stable trend from 2017 to 2019, showing a slight decline from 20.13% in 2017 to 19.83% in 2019. However, from 2019 onward, the margin improved significantly, reaching 21.58% in 2020 and increasing further to 22.54% in 2021. This upward movement indicates enhanced operational efficiency or better cost management in the latter years.
- Turnover of capital (TO)
- The turnover of capital showed a positive growth trajectory over the period under review. Starting at 1.65 in 2017, it increased modestly to 1.7 in 2018 before slightly dropping to 1.67 in 2019. Subsequently, the ratio rose more sharply to 1.87 in 2020 and then to 2.31 in 2021, suggesting improved utilization of capital assets to generate sales or revenues.
- 1 – Effective cash tax rate (CTR)
- The effective cash tax rate, expressed here as its complement (1 – CTR), was notably lower in 2017 at 68.73%. It increased substantially to approximately 79% in the subsequent years, stabilizing around that level through 2018 to 2021. This pattern indicates a reduction in payable cash taxes relative to operating profits after 2017, maintaining a consistent tax efficiency thereafter.
- Return on invested capital (ROIC)
- The return on invested capital showed a marked upward trend throughout the period. Starting at 22.83% in 2017, ROIC increased to 26.99% in 2018 and slightly decreased to 26.16% in 2019. Thereafter, it experienced a significant rise, achieving 31.51% in 2020 and reaching a peak of 40.97% in 2021. This improvement suggests enhanced profitability and effective capital deployment over time.
Operating Profit Margin (OPM)
O’Reilly Automotive Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Sales | ||||||
| Add: Increase (decrease) in deferred revenue liability | ||||||
| Adjusted sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2021 Calculation
OPM = 100 × NOPBT ÷ Adjusted sales
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibits a consistent upward trend over the five-year period. Starting from approximately 1.81 billion USD in 2017, it increased to about 3.00 billion USD by the end of 2021. This reflects a significant growth in profitability, with the most notable jump occurring between 2019 and 2020, where the profit rose by nearly 24.4%.
- Adjusted Sales
- Adjusted sales also show a steady increase throughout the period analyzed. Sales grew from approximately 8.98 billion USD in 2017 to approximately 13.33 billion USD in 2021. The rate of growth appears accelerating, particularly between 2019 and 2021, indicating expanding revenue generation capabilities.
- Operating Profit Margin (OPM)
- The operating profit margin demonstrates a generally positive trend with minor fluctuations. The margin slightly declined from 20.13% in 2017 to 19.83% in 2019 but then increased more consistently, reaching 22.54% by 2021. This improvement in margin indicates enhanced operational efficiency and better cost control relative to sales.
- Overall Insights
- The data collectively shows robust financial performance marked by increasing sales revenue and growing profitability. The improvement in operating profit margin suggests that the company has been managing its expenses effectively amid rising sales volumes. The sharp upswing in profits from 2020 onwards could be indicative of strategic initiatives or favorable market conditions impacting earnings positively.
Turnover of Capital (TO)
O’Reilly Automotive Inc., TO calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Sales | ||||||
| Add: Increase (decrease) in deferred revenue liability | ||||||
| Adjusted sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Invested capital. See details »
2 2021 Calculation
TO = Adjusted sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Adjusted Sales
- Adjusted sales exhibited consistent growth over the five-year period from 2017 to 2021. Beginning at $8,977,626 thousand in 2017, the amount steadily increased each year, reaching $13,326,463 thousand by the end of 2021. This indicates a strong upward trajectory in revenue generation, reflecting expanding operational scale or improved market demand.
- Invested Capital
- Invested capital showed a moderate increase from 2017 through 2020, rising from $5,440,691 thousand to $6,200,132 thousand. However, in 2021, there was a notable decline to $5,766,861 thousand, reversing the previous trend. This reduction in invested capital in 2021 could suggest a strategic divestment, optimization of asset base, or improvements in capital efficiency.
- Turnover of Capital (TO)
- The turnover of capital ratio displayed a positive upward trend throughout the period, starting at 1.65 in 2017 and culminating at 2.31 in 2021. This ratio measures the efficiency of capital utilization to generate sales. The steady increase, particularly the sharp rise between 2020 and 2021, signals enhanced effectiveness in the use of invested capital to drive revenue, coinciding with the reduced capital base observed in 2021.
- Overall Insights
- The data suggests ongoing growth in sales coupled with improved capital efficiency. While invested capital expanded gradually between 2017 and 2020, its decline in 2021 alongside rising turnover indicates a shift towards using capital more effectively rather than simply increasing capital investments. The upward sales trend paired with higher turnover of capital ratio implies strong operational performance and effective asset management during the period reviewed.
Effective Cash Tax Rate (CTR)
O’Reilly Automotive Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2021 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- Cash operating taxes demonstrate a fluctuating yet overall increasing trend from 2017 to 2021. Starting at approximately $565 million in 2017, the amount declined significantly to around $392 million in 2018. Following this dip, cash operating taxes gradually increased each year, reaching over $641 million by 2021, the highest figure in the reported period.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibits consistent growth throughout the analyzed timeframe. Beginning at roughly $1.81 billion in 2017, it steadily increased each year, culminating in about $3.0 billion in 2021. This upward trajectory indicates expanding operational profitability over the five-year span.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate shows a declining trend initially, dropping from 31.27% in 2017 to 20.58% in 2018. Thereafter, it stabilized near the low 20% range, fluctuating slightly around 21% through 2019 to 2021. This suggests improvements in tax efficiency or changes in tax strategy impacting the effective tax burden.