QualityOpInc Gr 1Y#66
ROIC-WACC Spread captures how efficiently a company converts capital into earnings.
By Javier Sanz, Founder & Lead AnalystEditorially reviewed
Last updated: Reviewed by: Javier Sanz
Formula
(OpInc_current - OpInc_prior) / |OpInc_prior| x 100
Description
Year-over-year growth in operating income. This focuses on core business profitability, excluding the effects of financing decisions, tax changes, and non-operating items. It provides a cleaner view of whether the business itself is becoming more profitable.
Interpretation
Above 10% is solid. Compare to revenue growth: operating income growing faster than revenue indicates improving operating leverage. Slower operating income growth relative to revenue signals rising costs.
Related metrics: Return on Equity (ROE), Return on Assets (ROA). (Updated 2026)
Further Reading
- SEC EDGAR primary filings on ROIC-WACC Spread- Primary source filings used to calculate ROIC-WACC Spread.
FAQ
How is ROIC-WACC Spread calculated?+
ROIC-WACC Spread uses the formula: (OpInc_current - OpInc_prior) / |OpInc_prior| x 100. 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 ROIC-WACC Spread value by sector?+
There is no single 'good' value for ROIC-WACC Spread — context is sector-driven. compare against sector median on /screener with the Sector filter applied. The /screener exposes sector-relative percentiles for ROIC-WACC Spread on every ticker, so you can compare against the sector median rather than the broad-market median.
Which investors use ROIC-WACC Spread?+
Charlie Munger, Joel Greenblatt, Terry Smith cite ROIC-WACC Spread 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 ROIC-WACC Spread?+
ROIC-WACC Spread can mislead in asset-light businesses where conventional capital ratios mislead. Pair ROIC-WACC Spread 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 ROIC-WACC Spread data?+
Visit any /stock/[ticker] page on ValueMarkers to see live ROIC-WACC Spread data, sector percentiles, and the VMCI composite score that integrates ROIC-WACC Spread with 119 other indicators across 100,000+ stocks. The free /screener exposes ROIC-WACC Spread 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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