SandRidge Energy, Inc. (NYSE:SD) is an oil and natural gas company based in the United States. It focuses on the exploration and production of hydrocarbons, primarily in the Mid-Continent region. The company competes with other energy firms like Range Resources Corporation, Chesapeake Energy Corporation, Southwestern Energy Company, SM Energy Company, and Northern Oil and Gas, Inc.
SandRidge Energy’s Return on Invested Capital (ROIC) is 12.86%, which is higher than its Weighted Average Cost of Capital (WACC) of 8.11%. This indicates that SandRidge is generating returns that exceed its cost of capital, a positive sign for investors. The ROIC to WACC ratio of 1.59 further supports this, showing efficient capital use.
In comparison, Range Resources Corporation (RRC) has a ROIC of 10.96% and a WACC of 6.51%, resulting in a ROIC to WACC ratio of 1.68. This is the highest among the peers, suggesting that RRC is the most efficient in generating returns relative to its cost of capital. This efficiency is crucial for creating shareholder value.
Chesapeake Energy Corporation (CHK) presents a different picture with a ROIC of 1.08% and a WACC of 5.74%, leading to a low ROIC to WACC ratio of 0.19. This indicates that CHK is not generating sufficient returns to cover its cost of capital, which could be a concern for investors.
Southwestern Energy Company (SWN) and SM Energy Company (SM) show negative ROIC figures of -19.81% and -764.00%, respectively. Their ROIC to WACC ratios of -2.73 and -79.67 highlight significant inefficiencies in capital use. These figures suggest that both companies are struggling to generate returns that justify their capital costs.
