Return On Capital - More Relevant Than Ever
A continuously updated manual on how to look at ROIC, ROIIC, IRRs, and much more
In this new bi-weekly webinar, we covered:
The puts and takes on Ferrari’s Capital Markets Day - the guidance (extrapolating FX headwinds) and EPS outlook reflecting the share count as of June 30, 2025 (although >3.5 billion EUR in buybacks will be executed). Others’ discussion on Ferrari’s cumulative free cash flow guidance being irrelevant or weird leads into another topic: our companies can grow at a decent clip, whilst generating and paying out excess to shareholders. That excess cash flow becomes very relevant if you’re having a decent time horizon - and that’s ultimately what’s required for compounding our capital.
Why today’s market environment isn’t much focused on Return on Capital and longevity of returns that quality growth investors seek. Our e-book couldn’t have come at a more timely moment. Meanwhile, we’re also clear about one thing: there’s no perfect Return on Capital definition. As with many things in finance, it’s about understanding the nuances and seeing through the flaws. We’ll have it proofread by some of our premium members to get a solid manual out (will take a 2-4 months then), which will be continuously updated as questions/suggestions arise. The below slide highlights the key goals of our first e-book (exclusive to annual members).
Finally, we’ve highlighted the key takeaways from our Puuilo deep dive. The next deep dive will be published following our first e-book. We’re thinking of another serial acquirer - probably Heico or Brown & Brown. Two companies we’d love to study in great detail.
PS: we’ve finally found a solid external microphone after an excellent suggestion from one of our fellow premium members, replacing our headset. The sound should be very okay - if not, please let me know.
The slide deck, presentation, and transcript can be found below.