Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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- Income Statement
- Common Stock Valuation Ratios
- Price to FCFE (P/FCFE)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Aggregate Accruals
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Return on Invested Capital (ROIC)
Amphenol Corp., ROIC calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Apple Inc. | ||||||
| Arista Networks Inc. | ||||||
| Cisco Systems Inc. | ||||||
| Dell Technologies Inc. | ||||||
| Super Micro Computer Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2023 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes exhibits an overall upward trend from 2019 through 2023. Starting at approximately 1,277,245 thousand US dollars in 2019, it increased consistently each year, reaching a peak of about 2,040,201 thousand US dollars in 2022. However, there is a slight decline in 2023, with NOPAT decreasing to 2,010,042 thousand US dollars, indicating a minor contraction following the previous year's growth.
- Invested Capital
- Invested capital has shown a steady increase throughout the entire period. Beginning at about 9,029,400 thousand US dollars in 2019, it has grown in each subsequent year, culminating at approximately 13,752,400 thousand US dollars in 2023. This consistent increase reflects ongoing investments or asset accumulation over the five-year timeframe.
- Return on Invested Capital (ROIC)
- ROIC exhibits some fluctuations but generally demonstrates positive performance. Initially, ROIC decreases slightly from 14.15% in 2019 to 13.46% in 2020. It then stabilizes around 13.65% in 2021 before rising noticeably to 15.97% in 2022. In 2023, ROIC declines again to 14.62%, remaining above the earlier years but below the 2022 peak. This pattern suggests improved efficiency in using invested capital in 2022, followed by a modest reduction in 2023.
- Overall Insights
- The data reflects expanding invested capital alongside generally increasing net operating profit, indicating growth in operational scale and profitability. The peak in ROIC in 2022 suggests a period of enhanced capital efficiency, though the subsequent dip in 2023 may warrant further investigation into operational or market factors influencing performance. The slight drop in NOPAT and ROIC in 2023, despite higher invested capital, could imply diminishing marginal returns or emerging challenges in maintaining profit growth relative to capital investment.
Decomposition of ROIC
Amphenol Corp., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
- Operating Profit Margin (OPM)
- The operating profit margin remained relatively stable over the observed period, fluctuating slightly between 19.29% and 20.79%. It exhibited a slight decline from 19.69% in 2019 to 19.29% in 2020, followed by a modest recovery with an increase to 20.79% in 2022, where it remained steady through 2023. This pattern suggests consistent profitability and effective cost management.
- Turnover of Capital (TO)
- Capital turnover experienced some variability, starting at 0.91 in 2019 and decreasing to 0.86 in 2020, which indicates a slight reduction in capital efficiency during that year. Subsequently, there was an improvement in 2022, reaching 0.99, before declining again to 0.91 in 2023. The fluctuations imply inconsistent asset utilization efficiency, with a notable peak in 2022.
- 1 – Effective Cash Tax Rate (CTR)
- The effective cash tax rate indicator demonstrated relative stability with minor fluctuations. It rose from 78.84% in 2019 to a high of 81.44% in 2020, then steadily declined to 77.02% by 2023. The gradual downward trend after 2020 may reflect improved tax planning or changes in tax regulations leading to more favorable cash tax rates.
- Return on Invested Capital (ROIC)
- Return on invested capital showed a moderate decline from 14.15% in 2019 to 13.46% in 2020, mirroring some challenges or investment inefficiencies in that year. Afterward, ROIC improved significantly, peaking at 15.97% in 2022 before settling slightly lower at 14.62% in 2023. The increase in ROIC between 2021 and 2022 indicates enhanced effectiveness in capital deployment and overall value generation.
Operating Profit Margin (OPM)
Amphenol Corp., OPM calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Apple Inc. | ||||||
| Arista Networks Inc. | ||||||
| Cisco Systems Inc. | ||||||
| Dell Technologies Inc. | ||||||
| Super Micro Computer Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
OPM = 100 × NOPBT ÷ Net sales
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes shows an overall upward trend from 2019 through 2023. Starting at approximately 1.62 billion USD in 2019, it increases steadily to about 1.66 billion in 2020, followed by a more pronounced rise to 2.11 billion in 2021, and then a significant jump to 2.62 billion in 2022. In 2023, the value slightly declines but remains relatively stable at around 2.61 billion USD. This pattern suggests strong growth in profitability with a slight plateau in the most recent year.
- Net Sales
- Net sales demonstrate a consistent upward trend over the five-year period. Beginning at approximately 8.23 billion USD in 2019, sales increase modestly to around 8.60 billion in 2020. Thereafter, there is a sharper rise to 10.88 billion in 2021, continuing to 12.62 billion in 2022. Sales then show a slight decrease to 12.55 billion USD in 2023. This data reveals growing revenue with a minor downturn in the last year.
- Operating Profit Margin (OPM)
- The operating profit margin remains relatively stable throughout the period, fluctuating within a narrow range. It starts at 19.69% in 2019 and slightly decreases to 19.29% in 2020. Margins experience a minor recovery to 19.39% in 2021, followed by a notable increase to 20.79% in both 2022 and 2023. The improvement in margin in the last two years suggests enhanced operational efficiency or better cost management despite the slight decrease in sales in 2023.
Turnover of Capital (TO)
Amphenol Corp., TO calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Apple Inc. | ||||||
| Arista Networks Inc. | ||||||
| Cisco Systems Inc. | ||||||
| Dell Technologies Inc. | ||||||
| Super Micro Computer Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Invested capital. See details »
2 2023 Calculation
TO = Net sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Net Sales
- Net sales demonstrated a consistent upward trajectory from 2019 through 2022, increasing from approximately 8.23 billion USD in 2019 to a peak of about 12.62 billion USD in 2022. However, in 2023, net sales experienced a slight decline to approximately 12.55 billion USD, indicating a minor setback after several years of growth.
- Invested Capital
- Invested capital exhibited a steady annual increase over the five-year period, growing from about 9.03 billion USD in 2019 to 13.75 billion USD in 2023. This growth reflects ongoing investments or asset accumulation within the company, expanding the capital base by over 4.7 billion USD during the analyzed timeframe.
- Turnover of Capital (TO)
- The turnover of capital ratio, which indicates the efficiency of the company in utilizing its invested capital to generate sales, showed fluctuations across the years. It started at 0.91 in 2019, dropped to its lowest point of 0.86 in 2020, then improved to 0.9 in 2021 and peaked at 0.99 in 2022. In 2023, the ratio decreased again to 0.91. These variations suggest periods of fluctuating operational efficiency, with the highest efficiency observed in 2022.
- Summary of Trends and Insights
- Overall, the company experienced significant growth in both net sales and invested capital from 2019 through 2022, indicating expansion and potentially increasing market share. The decline in net sales and the turnover ratio in 2023 suggests a relative slowdown or challenges in maintaining sales growth proportional to invested capital. The upward trend in invested capital during the entire period signifies sustained investment or expansion efforts. The movement in the turnover ratio emphasizes varying capital utilization efficiency, peaking in 2022 before decreasing in 2023, which may warrant closer examination to understand the underlying causes and to optimize future capital use.
Effective Cash Tax Rate (CTR)
Amphenol Corp., CTR calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Apple Inc. | ||||||
| Arista Networks Inc. | ||||||
| Cisco Systems Inc. | ||||||
| Dell Technologies Inc. | ||||||
| Super Micro Computer Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- The cash operating taxes show a consistent upward trend over the five-year period. Beginning at approximately $343 million in 2019, the amount increased slightly less in 2020 to about $308 million, then saw a substantial rise in 2021 to roughly $464 million. This upward trajectory continued in 2022 and 2023, reaching nearly $584 million and then $600 million, respectively. This pattern indicates increasing tax payments parallel to the company's growing profitability or taxable income base.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes experienced overall growth from 2019 to 2023. Starting at nearly $1.62 billion in 2019, it slightly increased to around $1.66 billion in 2020, followed by a notable rise to about $2.11 billion in 2021. The upward momentum accelerated in 2022, peaking at approximately $2.62 billion, before a slight decline to close to $2.61 billion in 2023. The data reflects a strong profit growth trajectory with only a marginal decrease in the last year.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate fluctuated slightly but generally increased from 2019 through 2023. It declined from 21.16% in 2019 to its lowest point at 18.56% in 2020, which could imply temporary tax advantages or adjustments during that year. Following this, the rate rose consistently: 22.01% in 2021, 22.25% in 2022, and reaching 22.98% in 2023. The steady increase in the tax rate post-2020 suggests a return to higher effective taxation levels aligned with the company’s growing taxable profits.
- Overall Analysis
- The financial data reveals a strong growth trend in operating profits accompanied by increasing cash tax payments and a rising effective tax rate after a dip in 2020. The increasing NOPBT from 2019 through 2022, paired with growing cash operating taxes, demonstrates expanding operational success and an increasing tax burden. The slight drop in profit in 2023 contrasts with the continued increase in tax payments and tax rate, implying that despite maintaining high profitability, tax expenses have become a relatively larger component of the company's financial obligations. This dynamic suggests a need for ongoing monitoring of tax efficiency and profit sustainability to manage the company's effective cash flow and tax liabilities efficiently.