PNM Resources (STU:98P) ROC % : 4.25% (As of Mar. 2024)

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What is PNM Resources 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 %. PNM Resources's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was 4.25%.

As of today (2024-06-09), PNM Resources's WACC % is 4.61%. PNM Resources's ROC % is 4.61% (calculated using TTM income statement data). PNM Resources earns returns that do not match up to its cost of capital. It will destroy value as it grows.

PNM Resources ROC % Historical Data

The historical data trend for PNM Resources'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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PNM Resources ROC % Chart

PNM Resources Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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5.62

3.07

3.26

3.92

3.52

PNM Resources Quarterly Data
	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
ROC %	Get a 7-Day Free Trial															3.50	3.26	3.91	0.43	4.25

PNM Resources ROC % Calculation

PNM Resources's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	278.092 * ( 1 - -18.06% )	/	( (8885.496	+	9783.388)	/ 2 )
=	328.3154152	/	9334.442
=	3.52 %

where

	Invested Capital		(A: Dec. 2022 )
=	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	))
=	8738.964	-	306.014	-	( 3.85	-	max(0, 840.509	-	387.963	+	3.85	))
=	8885.496

	Invested Capital		(A: Dec. 2023 )
=	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	))
=	9401.639	-	310.785	-	( 2.031	-	max(0, 1128.607	-	436.073	+	2.031	))
=	9783.388

PNM Resources's annualized Return on Capital (ROC %) for the quarter that ended in Mar. 2024 is calculated as:

	ROC % (Q: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	312.98 * ( 1 - -33.26% )	/	( (9783.388	+	9844.075)	/ 2 )
=	417.077148	/	9813.7315
=	4.25 %

where

	Invested Capital		(Q: Dec. 2023 )
=	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	))
=	9401.639	-	310.785	-	( 2.031	-	max(0, 1128.607	-	436.073	+	2.031	))
=	9783.388

	Invested Capital		(Q: Mar. 2024 )
=	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	))
=	9437.041	-	236.308	-	( 2.749	-	max(0, 1018.558	-	375.216	+	2.749	))
=	9844.075

Note: The Operating Income data used here is four times the quarterly (Mar. 2024) data.

PNM Resources (STU:98P) 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, PNM Resources's WACC % is 4.61%. PNM Resources's ROC % is 4.61% (calculated using TTM income statement data). PNM Resources 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.

PNM Resources ROC % Related Terms

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PNM Resources (STU:98P) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Utilities » Utilities - Regulated » PNM Resources Inc (STU:98P) » Definitions » ROC %

Comparable Companies

NWE MGEE POR IDA OKLO HE GNE VIA SUME OGE NEE SO DUK LSE:NG. PCG AEP D BOM:532555 PEG EXC

Traded in Other Exchanges

PNM:USA 98P:Germany

Address

414 Silver Avenue SW, Albuquerque, NM, USA, 87102-3289

Website

https://www.pnmresources.com

PNM Resources Inc, or PNMR, is a holding company that owns regulated utilities companies providing electricity and electric services. PNMR segments its operations by its two subsidiaries, PNM and TNMP. PNM provides electric generation, transmission, and distribution services mainly to areas of New Mexico. While PNM uses a variety of fuel sources across its power plant portfolio, its coal and gas-fueled sites produce most of the energy. TNMP owns and operates transmission and distribution services primarily in small to medium-sized communities in Texas. Both subsidiaries generate revenue for PNMR through the sale of electricity and transmission service fees fairly evenly split between residential and commercial customers. PNM generates the vast majority of PNMR's total revenue.

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