ROIC Stability
How consistent is the company's return on invested capital?
Definition
ROIC Stability measures the standard deviation of ROIC over multiple years. A low standard deviation indicates a durable competitive advantage — the company consistently earns high returns regardless of economic cycles.
Formula
Where
Interpretation
| Range | Assessment |
|---|---|
| < 3% | Highly stable — strong moat signal |
| 3% – 8% | Moderate — some cyclical variation |
| > 8% | Volatile — returns are inconsistent |
Buffett's insight: Companies with stable high ROIC over 10+ years almost always have a durable competitive advantage.
In Finsco
Computed by the audit moat command as part of the moat assessment framework.
Related Metrics
- ROIC — the underlying return metric
- Economic Moat — ROIC − WACC
- Gross Margin CoV — another moat stability signal