Altera, Cost of Capital and Return on Invested Capital
Only CT Capital LLC has the proprietary free cash flow-based return on invested capital (ROIC) and very detailed cost of capital credit-based models to properly evaluate these most important yardsticks. All other approaches fall short as they do not accurately reflect the underlying financial profitability and stability of a firm, its growth potential and value enhancement level
No wonder Altera is far outpacing its peer group. Continuing to invest in value enhancing projects, whose cash based return in invested capital exceeds its cost of capital is a value creating management strategy sure to reward equity holders. Altera’s free cash flow yield, like all the companies in our portfolio, is far in excess of the 10-year Treasury yield, while their debt measures are much higher than the median S&P company.
