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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- Common-Size Income Statement
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2005
- Debt to Equity since 2005
- Price to Sales (P/S) since 2005
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Return on Invested Capital (ROIC)
Hubbell Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 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).
1 NOPAT. See details »
2 Invested capital. See details »
3 2022 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 displays a fluctuating pattern over the five-year period. It decreased from 591,651 thousand US dollars in 2018 to 403,273 thousand US dollars in 2020, marking the lowest point within these years. Subsequently, NOPAT recovered, rising to 458,435 thousand US dollars in 2021 and reaching 597,801 thousand US dollars by the end of 2022, surpassing the initial value from 2018.
- Invested Capital
- The invested capital shows a gradually increasing trend over the same period. It started at 4,206,535 thousand US dollars in 2018 and remained relatively stable around 4.2 to 4.3 million US dollars through 2021. By 2022, it increased to 4,504,100 thousand US dollars, indicating a moderate rise in the assets deployed for business operations.
- Return on Invested Capital (ROIC)
- ROIC declined from 14.07% in 2018 to 9.32% in 2020, reflecting a decrease in profitability relative to the invested capital during the initial years. The efficiency improved thereafter, with ROIC climbing to 10.67% in 2021 and further increasing to 13.27% in 2022, suggesting an enhanced ability to generate returns from the invested capital towards the end of the period.
Decomposition of ROIC
Hubbell Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × | ||||
| Dec 31, 2018 | = | × | × |
Based on: 10-K (reporting date: 2022-12-31), 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).
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 showed a declining trend from 14.66% in 2018 to 12.2% in 2020. Subsequently, there was a recovery to 13.14% in 2021 and a notable increase to 15.61% in 2022, surpassing the initial 2018 level. This indicates improving operational efficiency and profitability in the most recent years.
- Turnover of Capital (TO)
- The turnover of capital remained relatively stable over the analyzed period, fluctuating slightly around the 1.0 ratio mark. It started at 1.07 in 2018, saw a mild increase to 1.09 in 2019, dropped to 0.97 in 2020 and 2021, before rising again to 1.1 in 2022. This pattern suggests consistent asset utilization efficiency with minor variations.
- 1 – Effective Cash Tax Rate (CTR)
- The metric representing one minus the effective cash tax rate demonstrated a downward trajectory from 89.72% in 2018 to 76.94% in 2022. The value experienced some fluctuations, notably declining sharply in 2019 and 2020, slightly improving in 2021, before dipping again in 2022. This trend implies an increase in the effective cash tax rate over time, potentially impacting net profitability.
- Return on Invested Capital (ROIC)
- Return on invested capital declined from 14.07% in 2018 to a low of 9.32% in 2020, reflecting reduced effectiveness in generating returns from capital investments during that period. Following 2020, ROIC improved to 10.67% in 2021 and further to 13.27% in 2022, indicating a recovery in capital efficiency though it remained slightly below the 2018 level.
Operating Profit Margin (OPM)
Hubbell Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in contract liabilities, deferred revenue | ||||||
| Adjusted net sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2022 Calculation
OPM = 100 × NOPBT ÷ Adjusted net sales
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibited a fluctuating trend over the five-year period. Starting at 659,460 thousand US dollars in 2018, it declined consistently through 2019 and 2020, reaching a low of 510,810 thousand US dollars. In 2021, a modest recovery was observed with an increase to 549,406 thousand US dollars, followed by a significant rise in 2022, peaking at 776,993 thousand US dollars. This suggests a period of contraction followed by strong profitability growth in the most recent year.
- Adjusted Net Sales
- Adjusted net sales demonstrated variability over the years. After a slight increase from 4,499,200 thousand US dollars in 2018 to 4,594,300 thousand US dollars in 2019, sales declined sharply in 2020 to 4,185,900 thousand US dollars and remained relatively flat in 2021 at 4,181,000 thousand US dollars. In 2022, there was a pronounced increase to 4,977,000 thousand US dollars, representing a recovery and expansion beyond the initial 2018 level.
- Operating Profit Margin (OPM)
- The operating profit margin percentage trend aligned somewhat with the NOPBT changes. The margin started at 14.66% in 2018, declined through 2019 and 2020 to a low of 12.20%, reflecting margin compression during this period. The margin then improved to 13.14% in 2021 and surged noticeably in 2022 to 15.61%, indicating enhanced operational efficiency and profitability in the latest year.
- Summary
- Overall, the financial data indicates that the company faced challenges in profitability and sales volumes particularly in the years 2019 and 2020, likely influenced by external or market conditions impacting revenue and margins. Recovery began in 2021 and strengthened sharply in 2022, with substantial growth in both net operating profit and net sales, alongside improved profit margins. The latest data reflects a robust rebound and possibly successful strategic or operational adjustments driving increased efficiency and higher returns.
Turnover of Capital (TO)
Hubbell Inc., TO calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in contract liabilities, deferred revenue | ||||||
| Adjusted net sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 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).
1 Invested capital. See details »
2 2022 Calculation
TO = Adjusted net sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Adjusted Net Sales
- The adjusted net sales showed fluctuations over the analyzed period. Starting at $4.5 billion in 2018, there was a slight increase in 2019, reaching approximately $4.59 billion. However, sales declined in 2020 and 2021, dropping to around $4.19 billion and $4.18 billion respectively. A notable recovery occurred in 2022, with sales increasing significantly to about $4.98 billion, exceeding the figures from previous years.
- Invested Capital
- Invested capital exhibited a generally upward trend from 2018 to 2022. Beginning at approximately $4.21 billion in 2018, it remained relatively stable through 2019 at about the same level. There was a moderate increase in 2020 and 2021, reaching approximately $4.33 billion and $4.30 billion respectively. In 2022, invested capital grew further to roughly $4.50 billion, marking the highest value in the period assessed.
- Turnover of Capital (TO)
- The turnover of capital experienced fluctuations throughout the years. Initially, it stood at 1.07 in 2018 and slightly increased to 1.09 in 2019, indicating improved efficiency in utilizing invested capital to generate sales. In 2020 and 2021, the ratio declined to 0.97 for both years, suggesting a reduction in capital turnover efficiency. However, in 2022, the turnover ratio recovered to 1.10, reaching the highest level during the period and reflecting enhanced operational performance relative to invested capital.
Effective Cash Tax Rate (CTR)
Hubbell Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2022 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data reveals several significant trends over the five-year period.
- Cash Operating Taxes
- There is a general upward trend in cash operating taxes from 2018 to 2022. The value more than doubled from 67,810 thousand US dollars in 2018 to 179,191 thousand US dollars in 2022. Notably, after a peak in 2019 at 122,697 thousand US dollars, there was a slight decline in 2020 and 2021 before a strong increase in 2022.
- Net Operating Profit Before Taxes (NOPBT)
- NOPBT shows a different pattern, initially declining from 659,460 thousand US dollars in 2018 to 510,810 thousand US dollars in 2020. After 2020, there is a recovery with an increase to 549,406 thousand in 2021 and a significant jump to 776,993 thousand in 2022, representing the highest value in the period analysed.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate fluctuated over the years but shows an overall increasing trend. It rose from 10.28% in 2018 to more than double that level at 23.06% in 2022. The rate peaked in 2020 at 21.05%, decreased in 2021, and then increased sharply again in 2022.
Overall, the data indicates that while the company experienced a decline in net operating profit before taxes from 2018 to 2020, it experienced a strong recovery and growth thereafter, culminating in the highest profitability in 2022. Concurrently, both the cash operating taxes and the effective cash tax rate have increased substantially by 2022, suggesting higher tax payments relative to profits. The fluctuations in tax rates may reflect changes in tax policy or adjustments in taxable income components during this period.