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ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Mastech Digital's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was -7.15%.
As of today (2024-05-13), Mastech Digital's WACC % is 7.83%. Mastech Digital's ROIC % is -0.90% (calculated using TTM income statement data). Mastech Digital earns returns that do not match up to its cost of capital. It will destroy value as it grows.
The historical data trend for Mastech Digital'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.
Mastech Digital Annual Data | |||||||||||||||||||||
Trend | Dec14 | Dec15 | Dec16 | Dec17 | Dec18 | Dec19 | Dec20 | Dec21 | Dec22 | Dec23 | |||||||||||
ROIC % | Get a 7-Day Free Trial | 10.46 | 13.67 | 12.89 | 9.89 | -0.91 |
Mastech Digital Quarterly Data | ||||||||||||||||||||
Mar19 | Jun19 | Sep19 | Dec19 | Mar20 | Jun20 | Sep20 | Dec20 | Mar21 | Jun21 | Sep21 | Dec21 | Mar22 | Jun22 | Sep22 | Dec22 | Mar23 | Jun23 | Sep23 | Dec23 | |
ROIC % | Get a 7-Day Free Trial | 6.19 | 1.38 | 1.07 | -0.21 | -7.15 |
For the Staffing & Employment Services subindustry, Mastech Digital'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.
For the Business Services industry and Industrials sector, Mastech Digital's ROIC % distribution charts can be found below:
* The bar in red indicates where Mastech Digital's ROIC % falls into.
Mastech Digital's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:
ROIC % (A: Dec. 2023 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (A: Dec. 2022 ) | + | Invested Capital (A: Dec. 2023 )) | / count ) |
= | -0.875 * ( 1 - 20.96% ) | / | ( (85.076 | + | 66.129) | / 2 ) |
= | -0.6916 | / | 75.6025 | |||
= | -0.91 % |
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 | )) |
= | 108.879 | - | 16.746 | - | ( 7.057 | - | max(0, 19.557 | - | 53.174 | + | 7.057 | )) |
= | 85.076 |
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 | )) |
= | 105.227 | - | 17.951 | - | ( 21.147 | - | max(0, 19.871 | - | 56.463 | + | 21.147 | )) |
= | 66.129 |
Mastech Digital's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Dec. 2023 is calculated as:
ROIC % (Q: Dec. 2023 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (Q: Sep. 2023 ) | + | Invested Capital (Q: Dec. 2023 )) | / count ) |
= | -6.52 * ( 1 - 22.29% ) | / | ( (75.686 | + | 66.129) | / 2 ) |
= | -5.066692 | / | 70.9075 | |||
= | -7.15 % |
where
Invested Capital | (Q: Sep. 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 | )) |
= | 109.543 | - | 17.976 | - | ( 15.881 | - | max(0, 19.704 | - | 56.218 | + | 15.881 | )) |
= | 75.686 |
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 | )) |
= | 105.227 | - | 17.951 | - | ( 21.147 | - | max(0, 19.871 | - | 56.463 | + | 21.147 | )) |
= | 66.129 |
Note: The Operating Income data used here is four times the quarterly (Dec. 2023) data.
* 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.
Mastech Digital (AMEX:MHH) 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, Mastech Digital's WACC % is 7.83%. Mastech Digital's ROIC % is -0.90% (calculated using TTM income statement data).
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.
Thank you for viewing the detailed overview of Mastech Digital's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Manoj P Singh | 10 percent owner | PUTNAM INVESTMENTS, ONE POST OFFICE SQUARE, BOSTON MA 02109 |
Sunil Wadhwani | director, 10 percent owner | 1004 MCKEE ROAD, OAKDALE PA 15071 |
Michael Lee Fleishman | officer: See Remarks | 1305 CHERRINGTON PKWY, BLDG 210, SUITE 400, MOON TOWNSHIP PA 15108 |
Vladimir Rak | director | 345 COURT STREET, CORAOPOLIS PA 15108 |
Ganeshan Venkateshwaran | officer: See Remarks | 1305 CHERRINGTON PKWY, BLDG 210, STE 400, MOON TOWNSHIP PA 15108 |
Paul Philip Burton | officer: See Remarks | 1305 CHERRINGTON PARKWAY, SUITE 400, MOON TOWNSHIP PA 15109 |
Brenda C Galilee | director | C/O HALL KINION & ASSOCIATES INC, 75 ROWLAND WAY, SUITE 200, NOVATO CA 94945 |
Steven A Shaw | 10 percent owner | 503 13TH AVENUE EAST, #205, SEATTLE WA 98102 |
John J. Cronin | officer: Chief Financial Officer | 1603 BLACKBURN HTS DRIVE, SEWICKLEY PA 15143 |
Vivek Gupta | director, officer: President and CEO | C/O MASTECH HOLDINGS, 1305 CHERRINGTON PKWY, BLDG 200, STE 400, MOON TOWNSHIP PA 15108 |
Gerhard Watzinger | director | 2821 TARFLOWER WAY, NAPLES FL 34105 |
John Ausura | director | 210 CAPE COD WAY, MOORESVILLE NC 28117 |
Ashok Trivedi | director, 10 percent owner | 1004 MCKEE ROAD, OAKDALE PA 15071 |
Scott Adam Aicher | officer: See Remarks | 2709 PEBBLE BEACH DRIVE, OAKALND MI 48363 |
Denis D. Deet | officer: VP of Technology and CIO | C/O MASTECH HOLDINGS, INC., 1305 CHERRINGTON PKWY, BLDG 210, STE 400, MOON TOWNSHIP PA 15108 |
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