Safeway (FRA:SWY) ROIC % : 2.92% (As of Sep. 2014)

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What is Safeway ROIC %?

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Safeway's annualized return on invested capital (ROIC %) for the quarter that ended in Sep. 2014 was 2.92%.

As of today (2024-05-09), Safeway's WACC % is 2.72%. Safeway's ROIC % is 5.12% (calculated using TTM income statement data). Safeway generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.

Safeway ROIC % Historical Data

The historical data trend for Safeway's ROIC % 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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Safeway ROIC % Chart

Safeway Annual Data

Trend

Dec04

Dec05

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

Dec12

Dec13

ROIC %

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-5.30

6.99

5.72

4.23

4.57

Safeway Quarterly Data
	Dec09	Mar10	Jun10	Sep10	Dec10	Mar11	Jun11	Sep11	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14
ROIC %	Get a 7-Day Free Trial															2.52	7.43	1.44	3.52	2.92

Competitive Comparison of Safeway's ROIC %

For the Grocery Stores subindustry, Safeway's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Safeway's ROIC % Distribution in the Retail - Defensive Industry

For the Retail - Defensive industry and Consumer Defensive sector, Safeway's ROIC % distribution charts can be found below:

* The bar in red indicates where Safeway's ROIC % falls into.

Safeway ROIC % Calculation

Safeway's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2013 is calculated as:

	ROIC % (A: Dec. 2013 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2012 )	+	Invested Capital (A: Dec. 2013 ))	/ count )
=	463.842 * ( 1 - 26.7% )	/	( (8267.472	+	6612.34)	/ 2 )
=	339.996186	/	7439.906
=	4.57 %

where

	Invested Capital		(A: Dec. 2012 )
=	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	))
=	11168.634	-	3253.13	-	( 268.376	-	max(0, 3527.908	-	3175.94	+	268.376	))
=	8267.472

	Invested Capital		(A: Dec. 2013 )
=	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	))
=	12570.235	-	4054.566	-	( 3392.529	-	max(0, 4275.172	-	6178.501	+	3392.529	))
=	6612.34

Safeway's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Sep. 2014 is calculated as:

	ROIC % (Q: Sep. 2014 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2014 )	+	Invested Capital (Q: Sep. 2014 ))	/ count )
=	292.396 * ( 1 - 34.37% )	/	( (6455.456	+	6696.57)	/ 2 )
=	191.8994948	/	6576.013
=	2.92 %

where

	Invested Capital		(Q: Jun. 2014 )
=	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	))
=	10089.53	-	1990.954	-	( 1643.12	-	max(0, 2221.984	-	3943.709	+	1643.12	))
=	6455.456

	Invested Capital		(Q: Sep. 2014 )
=	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	))
=	9933.421	-	2190.26	-	( 1046.591	-	max(0, 2248.15	-	3522.342	+	1046.591	))
=	6696.57

Note: The Operating Income data used here is four times the quarterly (Sep. 2014) data.

Safeway (FRA:SWY) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. 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 ROIC % 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, Safeway's WACC % is 2.72%. Safeway's ROIC % is 5.12% (calculated using TTM income statement data). Safeway generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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. Safeway 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 %, ROIC % 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.

Safeway ROIC % Related Terms

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Safeway (FRA:SWY) Business Description

Industry

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Address

Website

http://www.safeway.com

Safeway Inc was incorporated in the state of Delaware in July 1986 as SSI Holdings Corporation and, thereafter, its name was changed to Safeway Stores, Incorporated. In February 1990, the Company changed its name to Safeway Inc. The Company is a food and drug retailers in the United States, with 1,335 stores at year-end 2013. The Company's U.S. retail operations are located principally in California, Hawaii, Oregon, Washington, Alaska, Colorado, Arizona, Texas and the Mid-Atlantic region. The Company also has a network of distribution, manufacturing and food-processing facilities. The Company retail business operates into seven geographic retail operating segments; Denver, Eastern, Northern California, Phoenix, Northwest, Texas and Southern California. In all geographical retail operating segments, it operates one store format, where each store offers the same general mix of products with similar pricing to similar categories of customers. The Company does not operate supercenters, warehouse formats, combination clothing/grocery stores or discount stores. It owns and operates GroceryWorks.com Operating Company, LLC ("GroceryWorks"), an online grocery channel doing business under the names Safeway.com and Vons.com. Safeway's stores provide grocery items tailored to local preferences. Its stores offer a selection of food and general merchandise and feature a variety of specialty departments such as bakery, delicatessen, floral and pharmacy. In addition, its stores offer Starbucks coffee shops and adjacent fuel centers. The Company also owns more than 300 other trademarks registered and/or pending in the United States Patent and Trademark Office and other jurisdictions, including trademarks for its product and services such as Safeway, Safeway SELECT, Rancher's Reserve, O Organics, Lucerne, Primo Taglio, Eating Right, mom to mom, waterfront BISTRO, Bright Green, Pantry Essentials, Open Nature, Refreshe, Snack Artist, Signature CafÃ©, Priority, just for U, My Simple Nutrition, Ingredients for Life, and other trademarks such as Pak'N Save Foods, Vons, Pavilions, Randalls, Tom Thumb, and Carrs Quality Centers. Blackhawk, a subsidiary of Safeway, provides third-party gift cards, prepaid cards, telecom cards and sports and entertainment cards to a group of top North American retailers for sale to retail customers. The competitive factors that affect the Company's business are location, quality, price, condition of assets, marketing and promotional strategies, service and consumer loyalty to other brands and stores. It faces intense competition from traditional grocery retailers, non-traditional competitors such as supercenters and club stores, as well as from specialty supermarkets, drug stores, dollar stores, convenience stores and restaurants. The Company's compliance with the federal, state, local and foreign laws and regulations have been adopted regulating the discharge of materials into the environment or otherwise related to the p

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