[US Stock Analysis] ROIC Sustained Performance Screening | Group 01: Big Tech & Platforms Edition (7 Stocks)

[US Stock Analysis] ROIC Sustained Performance Screening | Group 01: Big Tech & Platforms Edition (7 Stocks)

About this blog

The purpose of this blog is to research US-listed companies and build knowledge.
* Group 01 articles are published for free.

The stocks covered are companies that have maintained 'ROIC (Return on Invested Capital) > WACC (Weighted Average Cost of Capital)' for multiple years. This condition means that they are consistently generating returns that exceed their cost of capital.

In each article, I organize the business overview, industry position, and financial metrics in order. I try to group stocks from the same industry together as much as possible, but there may be times when industries are mixed.

I use AI (Claude) for the analysis.

Disclaimer

• The analysis is published as generated by AI (Claude).

• There is a possibility that the figures and evaluations contain errors.

• This does not constitute a recommendation to invest in any specific stock.

• I am not responsible for any damages based on the content of the articles.

Please make your own investment decisions.

Stock Analysis | Group 01: Big Tech & Platforms

AAPL / AMZN / GOOG / GOOGL / META / MSFT / NVDA

• Apple Inc. / AAPL

• Amazon.com, Inc. / AMZN

• Alphabet Inc. / GOOG・GOOGL

• Meta Platforms, Inc. / META

• Microsoft Corporation / MSFT

• NVIDIA Corporation / NVDA

Apple Inc. / AAPL

Numerical Summary (FY2024)

• ROA: 151.91%

• PBR: 31.18x

• ROIC: 50.60%

• WACC: 10.23%

• ROIC-WACC Spread: +40.37 points

• Consecutive Years ROIC > WACC: 4 years

Key Metrics

• Gross Margin: 46.3% (Source: Apple IR / SEC 8-K, FY2024)

• FCF Margin (Free Cash Flow Margin): 27.8% (Source: monexa.ai, FY2024)

• Revenue Growth Rate (YoY): +2.0% (Source: MacroTrends, FY2024)

• EV/EBITDA: Approx. 26x (Source: monexa.ai, FY2024)

Business Overview

Apple is an ecosystem company that combines hardware such as smartphones, PCs, and wearables with services like the App Store, Apple Music, and iCloud. In FY2024, revenue consisted of approximately $315 billion from Products (iPhone, Mac, iPad, etc.) and approximately $96 billion from Services, with the high-margin services segment continuing to expand. It maintains a top-tier global market share in the smartphone market and possesses exceptional pricing power in the premium segment.

Financial Commentary

The structure of an ROIC exceeding 50% and a WACC of around 10% means the company is earning returns more than five times its cost of capital, representing an overwhelming level of capital efficiency. The ROA exceeding 150% is largely due to asset compression from aggressive share buybacks, so caution is required when interpreting this as an indicator of actual profitability. While the PBR is high at over 31x, this is supported by the profitability of the services business and the company's strong brand power.

Investment Judgment Memo

[Note]

• ROIC-WACC spread is over 40 points, maintained for 4 consecutive years.

• Both gross margins and FCF margins are at high levels, and the trend of margin improvement through servitization continues.

• Although the revenue growth rate is low at +2%, the high growth of the services division (+14% YoY) supports the overall performance, and the quality of earnings is high.

*This article is for information organization purposes only and does not constitute investment advice.

Amazon.com, Inc. / AMZN

Numerical Summary (FY2024)

• ROA: 18.89%

• PBR: 9.49x

• ROIC: 6.03%

• WACC: 11.61%

• ROIC-WACC Spread: +1.86 points

• Consecutive Years ROIC > WACC: 2 years

Key Metrics

• Gross Margin: Approx. 49% (Source: Amazon IR / SEC 8-K, FY2024)

• FCF Margin (Free Cash Flow Margin): Approx. 6% (FCF $38.2B / Revenue $638.0B) (Source: Amazon IR, FY2024)

• Revenue Growth Rate (YoY): +11% (Source: Amazon IR, FY2024)

• EV/EBITDA: Approx. 19x (Source: Bullfincher, FY2024)

Business Overview

Amazon is a diversified platform company centered on e-commerce, cloud (AWS), advertising, and logistics infrastructure. In FY2024, AWS revenue reached $107.6 billion, a +19% increase year-over-year, and AWS generates the majority of operating profit. While the e-commerce business itself remains a low-margin structure, the rapid growth of AWS and the advertising business has significantly improved the company's overall earnings profile.

Financial Commentary

ROIC stands at 6.0%, slightly above the WACC (11.6%), with a spread of 1.86 points, which is the smallest value among the stocks covered here. This is because large-scale capital expenditures (logistics networks and data centers) in the e-commerce business are inflating the denominator of invested capital. If the high profit margins of the AWS and advertising businesses continue, there is significant room for ROIC to improve in the future. Although the FCF margin is low at approximately 6%, this figure is after deducting annual capital expenditures (CapEx) of 8 trillion yen, and it remains solid on an operating cash flow basis.

Investment Decision Memo

[Observation Required]

• The ROIC-WACC spread is low at 1.86 points, and the consecutive year count is short at 2 years.

• The low FCF margin is due to high CapEx levels, as the company is in a period of upfront investment in anticipation of future monetization.

• Continued monitoring is necessary as the growth of AWS and the expansion of the advertising business are key to improving ROIC.

*This article is for information organization purposes and does not constitute investment advice.

Alphabet Inc. / GOOG・GOOGL

Numerical Summary (FY2024)

• ROA: 31.83%

• PBR: GOOG 4.11x / GOOGL 4.39x

• ROIC: 24.19%

• WACC: GOOG 10.19% / GOOGL 10.20%

• ROIC-WACC Spread: GOOG +14.00 points / GOOGL +13.99 points

• Consecutive Years ROIC > WACC: 4 years

*GOOG and GOOGL are both Alphabet shares, differing only in voting rights. Since financial figures are identical, the following analysis treats Alphabet as a whole.

Key Metrics

• Gross Margin: Approx. 57-58% (Source: financecharts.com / monexa.ai, FY2024)

• FCF Margin (Free Cash Flow Margin): Approx. 20.8% (Source: monexa.ai, FY2024)

• Revenue Growth Rate (YoY): +13.9% (Source: MacroTrends, FY2024)

• EV/EBITDA: Approx. 24x (Source: stockanalysis.com, TTM)

Business Overview

Alphabet is a technology conglomerate that owns Google Search, YouTube, Google Cloud, Waymo, and others. The core of its revenue is the Google advertising business (Search ads and YouTube ads), with total company revenue exceeding $350 billion in FY2024. Google Cloud is growing rapidly at +29% year-over-year, and the company is accelerating large-scale investments in AI (Artificial Intelligence) infrastructure.

Financial Commentary

With an ROIC exceeding 24%, which is about 14 percentage points above its WACC, maintaining this for four consecutive years demonstrates a stable competitive advantage. The gross margin is approximately 57-58%, with the high profitability of the advertising business driving the overall performance. With a PBR in the 4x range, it appears relatively undervalued compared to the other stocks in this comparison, and it can be seen as an attractive level when considering future growth from AI investments.

Investment Judgment Notes

[Highlight]

• ROIC-WACC spread is 14 percentage points, maintained for 4 consecutive years.

• Both gross margin and FCF margin are at high levels, reflecting the monopolistic competitive strength of Google Search in the figures.

• Investments in AI (Gemini) and Google Cloud involve large-scale CapEx, but there is sufficient room for growth.

*This article is intended for information organization purposes and does not constitute investment advice.

Meta Platforms, Inc. / META

Numerical Summary (FY2024)

• ROA: 27.83%

• PBR: 16.52x

• ROIC: 22.09%

• WACC: 10.88%

• ROIC-WACC Spread: +11.21 percentage points

• Consecutive Years ROIC > WACC: 4 years

Key Metrics

• Gross Margin: Approx. 81% (Source: Meta IR, FY2024)

• FCF Margin (Free Cash Flow Margin): approx. 26% (Source: StockStory, FY2024)

• Revenue Growth Rate (YoY): +21.9% (Source: MacroTrends, FY2024)

• EV/EBITDA: approx. 19-20x (Source: StockStory, recent)

Business Overview

Meta is one of the world's largest social media companies, operating Facebook, Instagram, WhatsApp, and Messenger. Almost all of its revenue comes from digital advertising, and in FY2024, it achieved revenue of $164.5 billion (+21.9% YoY). With over 3.5 billion Daily Active People (DAP), it possesses strengths in the scale and precision of its advertising platform. While Reality Labs (the metaverse business) continues to operate at a loss, the core advertising business supports it with high profit margins.

Financial Commentary

A gross margin of approximately 81% stands out even among the stocks covered here, reflecting the low marginal costs of the digital advertising business. The ROIC is 22%, exceeding the WACC by 11 percentage points, and maintaining this for four consecutive years demonstrates sustained high capital efficiency. The FCF margin is also at a high level of approximately 26%, confirming the financial flexibility to simultaneously pursue dividend initiation, share buybacks, and AI investments.

Investment Judgment Memo

[Highlight]

• ROIC-WACC spread is 11 percentage points, maintained for four consecutive years.

• The structure combining an 81% gross margin, 22% revenue growth, and 26% FCF margin is excellent.

• The risk of continued losses at Reality Labs and the rapid expansion of AI capital expenditures compressing future FCF requires close monitoring.

*This article is intended for information organization purposes and does not constitute investment advice.

Microsoft Corporation / MSFT

Numerical Summary (FY2024)

• ROA: 29.65%

• PBR: 16.45x

• ROIC: 28.32%

• WACC: 10.28%

• ROIC-WACC Spread: +18.04 percentage points

• Consecutive years with ROIC > WACC: 4 years

Key Metrics

• Gross Margin: Approx. 69.8% (Source: Microsoft IR / SEC 10-K, FY2024)

• FCF Margin (Free Cash Flow Margin): Approx. 25% (Source: stockanalysis.com, TTM)

• Revenue Growth (YoY): +16% (Source: Microsoft IR / SEC 10-K, FY2024)

• EV/EBITDA: Approx. 16-17x (Source: stockanalysis.com, TTM)

Business Overview

Microsoft is a comprehensive technology company encompassing Office, Windows, Azure, and LinkedIn. FY2024 revenue reached $245.1 billion, a 16% year-over-year growth, with cloud (Azure) and productivity tools (Office 365) serving as the primary growth drivers. It holds an overwhelming customer base in the enterprise IT market and is advancing the construction of next-generation platforms through aggressive investment in AI (Azure OpenAI Service and Copilot).

Financial Commentary

An ROIC exceeding 28% and a WACC spread of 18 percentage points demonstrate ideal capital efficiency that combines both stability and growth. The gross margin is approximately 70%, maintaining a high level for a portfolio that mixes cloud and productivity software. An EV/EBITDA ratio of around 16-17x can be considered a reasonable valuation when taking growth, stability, and scale into account.

Investment Judgment Notes

[Focus]

• The ROIC-WACC spread is 18 percentage points, maintained for 4 consecutive years. It has the most stable balance among the stocks covered this time.

• Expansion of revenue opportunities through AI (Copilot, Azure OpenAI) is expected, offering significant room for growth.

• While in a phase of continued large-scale CapEx investment, the level of FCF is high, providing sufficient financial flexibility.

*This article is intended for information organization purposes and does not constitute investment advice.

NVIDIA Corporation / NVDA

Metric Summary (FY2025*)

• ROA: 76.33%

• PBR: 58.06x

• ROIC: 70.17%

• WACC: 17.33%

• ROIC-WACC Spread: +52.84 points

• Consecutive Years ROIC > WACC: 4 years

*Since NVIDIA's fiscal year ends in January, "FY2025" corresponds to the fiscal year ending January 2025 (February 2024 – January 2025).

Key Metrics

• Gross Margin: Approx. 75% (Source: NVIDIA IR / SEC 8-K, FY2025)

• FCF Margin (Free Cash Flow Margin): Approx. 46.6% (Source: monexa.ai, FY2025)

• Revenue Growth (YoY): +114% (Source: NVIDIA IR / SEC 8-K, FY2025)

• EV/EBITDA: Approx. 51x (Source: monexa.ai, FY2025 estimate)

Business Overview

NVIDIA is a data center and AI semiconductor company centered on GPUs (Graphics Processing Units). FY2025 revenue reached $130.5 billion, a phenomenal +114% year-over-year growth, with the data center segment accounting for $115.2 billion (+142% YoY). It holds a de facto monopoly on supply for AI-focused GPUs (H100/B100 series), with demand from cloud providers, research institutions, and government agencies expanding rapidly worldwide.

Financial Commentary

An ROIC exceeding 70% and a WACC spread of 53 points are unparalleled among the stocks covered here, with excess demand from the AI boom directly reflected in the financial metrics. The gross margin is also extremely high at approximately 75%, achieving a software-like revenue structure as a semiconductor company. However, the EV/EBITDA level of 51x indicates that the market has priced in a scenario of continued growth, so caution regarding stock price adjustment risk during a growth slowdown phase is necessary.

Investment Judgment Notes

[Highlight]

• The ROIC-WACC spread is outstanding at 52 points, maintained for 4 consecutive years.

• A gross margin of 75% and FCF margin of 47% are exceptionally high for a semiconductor company.

• With an EV/EBITDA over 50x, there is a sense of overvaluation, and the sustainability of AI demand and the rise of competitors (AMD, Intel, and in-house chip developers) are risk factors.

*This article is intended for information organization purposes and does not constitute investment advice.

Summary | Group 01 Investment Decision Label List

[Featured]

• AAPL | Apple Inc.

• GOOG/GOOGL | Alphabet Inc.

• META | Meta Platforms

• MSFT | Microsoft Corporation

• NVDA | NVIDIA Corporation

[Under Observation]

• AMZN | Amazon.com

The figures provided are current as of the time of writing. Please check the latest information via each company's IR or financial information services.

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