- MeridianLink’s Return on Invested Capital (ROIC) of 0.67% is significantly lower than its Weighted Average Cost of Capital (WACC) of 8.16%, indicating inefficiency in generating sufficient returns.
- PowerSchool Holdings, Inc. showcases a more favorable financial position with a ROIC of 1.93% against a WACC of 8.36%, highlighting its efficiency in utilizing capital.
- CS Disco, Inc. has a negative ROIC of -41.31% with a WACC of 13.55%, reflecting significant challenges in generating returns above its cost of capital.
MeridianLink, Inc. (NYSE:MLNK) is a company that provides software solutions for financial institutions. It offers a range of products that help banks and credit unions streamline their operations and improve customer service. In the competitive landscape, MeridianLink faces peers like PowerSchool Holdings, Inc., CS Disco, Inc., EverCommerce Inc., Intapp, Inc., and Paycor HCM, Inc., each with varying financial metrics.
In evaluating MeridianLink’s financial performance, the Return on Invested Capital (ROIC) is a crucial metric. MeridianLink’s ROIC stands at 0.67%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 8.16%. This indicates that the company is not generating sufficient returns to cover its cost of capital, which is a concern for investors.
Comparatively, PowerSchool Holdings, Inc. demonstrates a more favorable financial position with a ROIC of 1.93% against a WACC of 8.36%. This results in a ROIC to WACC ratio of 0.2307, the highest among the peers. This suggests that PowerSchool is more efficient in utilizing its capital to generate returns, making it a standout in the industry.
On the other hand, CS Disco, Inc. shows a negative ROIC of -41.31% with a WACC of 13.55%, resulting in a ROIC to WACC ratio of -3.0475. This indicates significant challenges in generating returns, as the company’s cost of capital far exceeds its returns. Similarly, Intapp, Inc. and Paycor HCM, Inc. also report negative ROIC to WACC ratios, highlighting inefficiencies in capital utilization.
EverCommerce Inc. presents a slightly better scenario with a ROIC of 1.42% and a WACC of 8.62%, leading to a ROIC to WACC ratio of 0.1652. While still below the cost of capital, it is a more favorable position compared to some peers. Overall, the analysis underscores the importance of ROIC and WACC in assessing a company’s financial health and capital efficiency.
