Crown Castle's Return on Invested Capital (ROIC) was 6.19% for the quarter that ended in September 2024 (annualized), and 5.79% when calculated using trailing twelve months (TTM) income statement data.
Understanding Crown Castle's Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) is a financial metric that assesses a company's efficiency in allocating the capital under its control to profitable investments. It indicates how well a company is generating profits from all its capital, both debt and equity. A higher ROIC generally suggests better capital allocation.
For Crown Castle, two key ROIC figures are available:
- Annualized ROIC for Q3 2024: For the quarter ending September 2024, Crown Castle's annualized ROIC was 6.19%. This figure provides a snapshot of the company's capital efficiency over a recent short-term period, projected annually.
- Trailing Twelve Months (TTM) ROIC: Based on data from the past twelve months, Crown Castle's ROIC stands at 5.79%. This provides a broader view of performance over a full year, smoothing out potential quarterly fluctuations.
Key Financial Metrics at a Glance
To put Crown Castle's capital efficiency into perspective, consider the following metrics:
| Metric | Value | Description |
|---|---|---|
| ROIC (Annualized, Q3 2024) | 6.19% | The return generated on invested capital for the quarter ending September 2024, annualized. |
| ROIC (Trailing Twelve Months - TTM) | 5.79% | The return generated on invested capital over the most recent 12-month period. |
| Weighted Average Cost of Capital (WACC) | 8.04% | As of November 26, 2024, the average rate Crown Castle expects to pay to finance its assets. |
Interpreting ROIC for Crown Castle
A crucial aspect of evaluating ROIC is comparing it against the company's Weighted Average Cost of Capital (WACC). WACC represents the minimum rate of return a company must earn on an existing asset base to satisfy its creditors and shareholders.
- If ROIC > WACC: The company is creating value for its shareholders, as it's earning more on its capital than it costs to acquire that capital.
- If ROIC < WACC: The company is not generating sufficient returns to cover its cost of capital, potentially indicating a destruction of value.
For Crown Castle, with its ROIC figures (6.19% annualized for Q3 2024, and 5.79% TTM) both being lower than its WACC of 8.04%, this suggests that the company's current investments are not generating returns high enough to cover its cost of financing. This is an important indicator for investors to consider regarding the company's long-term profitability and value creation.
Further Financial Information
For more detailed financial data and analysis on Crown Castle's performance metrics, including ROIC and WACC, you can refer to reputable financial data providers. Learn more about Crown Castle's financial profile here.
