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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 %. Chubb's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2024 was 4.18%.
As of today (2024-10-29), Chubb's WACC % is 3.80%. Chubb's ROIC % is 4.86% (calculated using TTM income statement data). Chubb 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.
The historical data trend for Chubb'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.
Chubb Annual Data | |||||||||||||||||||||
Trend | Dec14 | Dec15 | Dec16 | Dec17 | Dec18 | Dec19 | Dec20 | Dec21 | Dec22 | Dec23 | |||||||||||
ROIC % | Get a 7-Day Free Trial | 2.96 | 2.24 | 4.75 | 2.97 | 4.66 |
Chubb Quarterly Data | ||||||||||||||||||||
Sep19 | Dec19 | Mar20 | Jun20 | Sep20 | Dec20 | Mar21 | Jun21 | Sep21 | Dec21 | Mar22 | Jun22 | Sep22 | Dec22 | Mar23 | Jun23 | Sep23 | Dec23 | Mar24 | Jun24 | |
ROIC % | Get a 7-Day Free Trial | 3.98 | 4.29 | 6.48 | 4.40 | 4.18 |
For the Insurance - Property & Casualty subindustry, Chubb'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 Insurance industry and Financial Services sector, Chubb's ROIC % distribution charts can be found below:
* The bar in red indicates where Chubb's ROIC % falls into.
Chubb'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 | |||
= | EBIT * ( 1 - Tax Rate % ) | / | ( (Invested Capital (A: Dec. 2022 ) | + | Invested Capital (A: Dec. 2023 )) | / count ) |
= | 10198 * ( 1 - 5.36% ) | / | ( (191377.75 | + | 222422.3) | / 2 ) |
= | 9651.3872 | / | 206900.025 | |||
= | 4.66 % |
where
Invested Capital | (A: Dec. 2022 ) | ||||||
= | Total Assets | - | Accounts Payable & Accrued Expense | - | Excess Cash | ||
= | Total Assets | - | Accounts Payable & Accrued Expense | - | ( Balance Sheet Cash And Cash Equivalents | - | 5% * Revenue ) |
= | 199017 | - | 7780 | - | ( 2012 | - | 5% * 43055 ) |
= | 191377.75 |
Invested Capital | (A: Dec. 2023 ) | ||||||
= | Total Assets | - | Accounts Payable & Accrued Expense | - | Excess Cash | ||
= | Total Assets | - | Accounts Payable & Accrued Expense | - | ( Balance Sheet Cash And Cash Equivalents | - | 5% * Revenue ) |
= | 230682 | - | 8302 | - | ( 2449 | - | 5% * 49826 ) |
= | 222422.3 |
Chubb's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jun. 2024 is calculated as:
ROIC % (Q: Jun. 2024 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | EBIT * ( 1 - Tax Rate % ) | / | ( (Invested Capital (Q: Mar. 2024 ) | + | Invested Capital (Q: Jun. 2024 )) | / count ) |
= | 11552 * ( 1 - 18.11% ) | / | ( (224501.85 | + | 227720.15) | / 2 ) |
= | 9459.9328 | / | 226111 | |||
= | 4.18 % |
where
Invested Capital | (Q: Mar. 2024 ) | ||||||
= | Total Assets | - | Accounts Payable & Accrued Expense | - | Excess Cash | ||
= | Total Assets | - | Accounts Payable & Accrued Expense | - | ( Balance Sheet Cash And Cash Equivalents | - | 5% * Revenue ) |
= | 234867 | - | 8505 | - | ( 2508 | - | 5% * 12957 ) |
= | 224501.85 |
Invested Capital | (Q: Jun. 2024 ) | ||||||
= | Total Assets | - | Accounts Payable & Accrued Expense | - | Excess Cash | ||
= | Total Assets | - | Accounts Payable & Accrued Expense | - | ( Balance Sheet Cash And Cash Equivalents | - | 5% * Revenue ) |
= | 238551 | - | 9126 | - | ( 2400 | - | 5% * 13903 ) |
= | 227720.15 |
Note: The EBIT data used here is four times the quarterly (Jun. 2024) 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.
Chubb (NYSE:CB) 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, Chubb's WACC % is 3.80%. Chubb's ROIC % is 4.86% (calculated using TTM income statement data). Chubb 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. Chubb 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.
Thank you for viewing the detailed overview of Chubb's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Evan G Greenberg | director, officer: President & COO | THE CHUBB BUILDING, 17 WOODBOURNE AVENUE, HAMILTON D0 HM 08 |
Joseph F Wayland | officer: General Counsel | 1133 AVENUE OF THE AMERICAS, 45TH FLOOR, NEW YORK NY 10036 |
John J Lupica | officer: Chrm, Ins - NA, Pres.- ACE USA | 436 WALNUT STREET, PHILADELPHIA PA 19106-3703 |
Michael G Atieh | director | MERCK MEDCO MANAGED CARE INC, 100 SUMMIT AVE, MONTVALE NJ 07645 |
Juan Luis Ortega | officer: Executive Vice President* | CHUBB, AVENUE OF THE AMERICAS, NEW YORK NY 10036 |
Timothy Alan Boroughs | officer: Chief Investment Officer* | 1133 AVENUE OF THE AMERICAS, NEW YORK NY 10036 |
Peter C. Enns | officer: Executive Vice President and* | THE CHUBB BUILDING, 17 WOODBOURNE AVENUE, HAMILTON D0 HM 08 |
Annmarie T Hagan | officer: Chief Accounting Officer | TWO LIBERTY PLACE, 1601 CHESTNUT STREET, PHILADELPHIA PA 19192 |
John W Keogh | officer: CEO of ACE Overseas General | ACE OVERSEAS GENERAL, 1133 AVENUE OF THE AMERICAS, NEW YORK NY 10036 |
Theodore Shasta | director | C/O MBIA INC., 113 KING STREET, ARMONK NY 10504 |
Frances D. O'brien | officer: Chief Risk Officer | THE CHUBB BUILDING, 17 WOODBOURNE AVENUE, HAMILTON D0 HM 08 |
Nancy Buese | director | 1515 ARAPAHOE STREET, DENVER CO 80202-2126 |
Michael Corbat | director | 388 GREENWICH STREET, 17TH FLOOR, NEW YORK NY 10013 |
Bryce L. Johns | officer: Senior Vice President, * | THE CHUBB BUILDING, 17 WOODBOURNE AVENUE, HAMILTON D0 HM 08 |
Sean Ringsted | officer: Chief Risk Officer and* | THE ACE BLDG., 17 WOODBOURNE AVE., HAMILTON D0 HM 08 |
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