What is ROIC 5Y?
The average Return on Invested Capital over 5 years, showing consistent ability to generate returns above cost of capital.
Think of it like this
Like looking at your investment returns averaged over 5 years instead of just last year - shows true investing skill.
Formula
5Y ROIC = Average of annual ROIC over 5 years- Annual ROIC: NOPAT รท Invested Capital each year
- Average: Mean of 5 calculations
Why it matters
- Shows sustainable competitive advantage
- Smooths out cyclical variations
- Better predictor of future returns
- Warren Buffett's preferred metric
What's a good value?
> 15%
Excellent
Durable competitive advantage
10-15%
Good
Solid returns above cost of capital
7-10%
Average
Marginal value creation
< 7%
Poor
Likely destroying value
Real-world example
Coca-Cola maintains 15%+ ROIC over decades, showing incredible brand value.
Evaluate this indicator on 8,000+ US stocks
Download Signal Screener