Sears Holdings (Sears Holdings) ROC % : -29.87% (As of Oct. 2018)

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What is Sears Holdings ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Sears Holdings's annualized return on capital (ROC %) for the quarter that ended in Oct. 2018 was -29.87%.

As of today (2024-06-07), Sears Holdings's WACC % is 0.00%. Sears Holdings's ROC % is 0.00% (calculated using TTM income statement data). Sears Holdings earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Sears Holdings ROC % Historical Data

The historical data trend for Sears Holdings's ROC % 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.

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Sears Holdings ROC % Chart

Sears Holdings Annual Data

Trend

Jan09

Jan10

Jan11

Jan12

Jan13

Jan14

Jan15

Jan16

Jan17

Jan18

ROC %

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-10.16

-13.69

-11.74

-19.48

-9.87

Sears Holdings Quarterly Data
	Apr14	Jul14	Oct14	Jan15	Apr15	Jul15	Oct15	Jan16	Apr16	Jul16	Oct16	Jan17	Apr17	Jul17	Oct17	Jan18	Apr18	Jul18	Oct18	Oct19
ROC %	Get a 7-Day Free Trial															21.22	-19.93	-12.38	-29.87	-

Sears Holdings ROC % Calculation

Sears Holdings's annualized Return on Capital (ROC %) for the fiscal year that ended in Jan. 2018 is calculated as:

	ROC % (A: Jan. 2018 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jan. 2017 )	+	Invested Capital (A: Jan. 2018 ))	/ count )
=	-1936 * ( 1 - 60.96% )	/	( (7779	+	7542)	/ 2 )
=	-755.8144	/	7660.5
=	-9.87 %

where

	Invested Capital		(A: Jan. 2017 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	9362	-	1387	-	( 196	-	max(0, 4681	-	4996	+	196	))
=	7779

	Invested Capital		(A: Jan. 2018 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	7262	-	823	-	( 113	-	max(0, 4915	-	3812	+	113	))
=	7542

Sears Holdings's annualized Return on Capital (ROC %) for the quarter that ended in Oct. 2018 is calculated as:

	ROC % (Q: Oct. 2018 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jul. 2018 )	+	Invested Capital (Q: Oct. 2018 ))	/ count )
=	-1976 * ( 1 - 4.04% )	/	( (6645	+	6051)	/ 2 )
=	-1896.1696	/	6348
=	-29.87 %

where

	Invested Capital		(Q: Jul. 2018 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	6937	-	701	-	( 110	-	max(0, 4277	-	3868	+	110	))
=	6645

	Invested Capital		(Q: Oct. 2018 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	6677	-	279	-	( 436	-	max(0, 3448	-	3795	+	436	))
=	6051

Note: The Operating Income data used here is four times the quarterly (Oct. 2018) data.

Sears Holdings (NAS:SHLDW) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. 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 ROC % 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, Sears Holdings's WACC % is 0.00%. Sears Holdings's ROC % is 0.00% (calculated using TTM income statement data). Sears Holdings earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Be Aware

Like ROE % and ROA %, ROC % 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.

Sears Holdings ROC % Related Terms

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Sears Holdings (Sears Holdings) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Retail - Cyclical » Sears Holdings Corp (NAS:SHLDW) » Definitions » ROC %

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Traded in Other Exchanges

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Address

3333 Beverly Road, Hoffman Estates, IL, USA, 60179

Website

http://www.searsholdings.com

Sears Holdings Corporation is an America-based retailer that integrates the digital and physical shopping experiences for consumers. The company operates through retail store brands Sears and Kmart. Sears provides a broad range of home merchandise, apparel, automotive products and home services through both online and offline channels across the United States, and it owns proprietary brands, including Kenmore, Craftsman, and DieHard. Kmart is a mass merchandising firm, offering quality products to customers through exclusive brands. The majority of the company's revenue comes from the domestic market.