QualityEPS CAGR 5Y#59
Cash Return on Capital measures how efficiently a company converts capital into earnings.
By Javier Sanz, Founder & Lead AnalystEditorially reviewed
Last updated: Reviewed by: Javier Sanz
Formula
(EPS_now / EPS_5y_ago)^(1/5) - 1
Description
Compound annual growth rate of earnings per share over five years. A longer view that captures at least one business cycle. Companies that maintain double-digit EPS CAGR over five years typically have genuine competitive advantages.
Interpretation
Above 10% over five years is strong. Compare to the PEG ratio: consistent 5Y EPS CAGR combined with a PEG below 1 is a classic GARP signal. Negative 5Y CAGR with positive 1Y growth may indicate a recovery play.
Related metrics: Return on Equity (ROE), Return on Assets (ROA). (Updated 2026)
Further Reading
- SEC EDGAR primary filings on Cash Return on Capital- Primary source filings used to calculate Cash Return on Capital.
FAQ
How is Cash Return on Capital calculated?+
Cash Return on Capital uses the formula: (EPS_now / EPS_5y_ago)^(1/5) - 1. compare against sector median on /screener with the Sector filter applied. ValueMarkers refreshes the calculation within 24 hours of each new SEC filing using SEC EDGAR 10-K + 10-Q filings (segment-level disclosures).
What is a good Cash Return on Capital value by sector?+
There is no single 'good' value for Cash Return on Capital — context is sector-driven. compare against sector median on /screener with the Sector filter applied. The /screener exposes sector-relative percentiles for Cash Return on Capital on every ticker, so you can compare against the sector median rather than the broad-market median.
Which investors use Cash Return on Capital?+
Charlie Munger, Joel Greenblatt, Terry Smith cite Cash Return on Capital as a key input to to find compounders with durable economic moats. The academic anchor is Greenblatt (2005) Magic Formula and Mauboussin (2014). ValueMarkers weights this within the Quality pillar of the VMCI score (30% of total).
What are the limitations of Cash Return on Capital?+
Cash Return on Capital can mislead in asset-light businesses where conventional capital ratios mislead. Pair Cash Return on Capital with at least two cross-checks from other VMCI pillars — for example, free cash flow trend, balance-sheet quality, and earnings consistency — before drawing a single-metric conclusion.
Where can I see live Cash Return on Capital data?+
Visit any /stock/[ticker] page on ValueMarkers to see live Cash Return on Capital data, sector percentiles, and the VMCI composite score that integrates Cash Return on Capital with 119 other indicators across 100,000+ stocks. The free /screener exposes Cash Return on Capital as a filterable column.
Related Quality Indicators
Return on Equity (ROE)Op Margin
Return on Equity measures how efficiently a company converts capital into earnings.
Return on Assets (ROA)Net Margin
Return on Assets is the metric used to how efficiently a company converts capital into earnings.
Return on Invested Capital (ROIC)EBITDA Margin
Return on Invested Capital measures how efficiently a company converts capital into earnings.
Return on Capital Employed (ROCE)FCF Margin
Return on Capital Employed is the metric used to how efficiently a company converts capital into earnings.
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