Battalion Oil Corporation (AMEX:BATL) is an oil and gas company engaged in the exploration, development, and production of oil and natural gas properties. The company operates primarily in the United States, focusing on maximizing the value of its assets. In the competitive landscape, Battalion Oil faces peers like Epsilon Energy Ltd., Citizens Community Bancorp, Inc., Perma-Pipe International Holdings, Inc., Ashford Inc., and Amplify Energy Corp.
In evaluating Battalion Oil’s financial performance, the Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC) are crucial metrics. Battalion Oil’s ROIC is -6.63%, while its WACC is 8.82%, resulting in a ROIC to WACC ratio of -0.75. This negative ratio indicates that the company is not generating enough returns to cover its cost of capital, highlighting inefficiencies in capital utilization.
Comparatively, Epsilon Energy Ltd. shows a more favorable financial position with a ROIC of 4.56% and a WACC of 4.97%, leading to a ROIC to WACC ratio of 0.92. This suggests that Epsilon Energy is effectively generating returns that are close to its cost of capital, making it the most efficient among its peers in terms of capital utilization.
Perma-Pipe International Holdings, Inc. has a ROIC of -26.62% and a WACC of 5.25%, leading to a ROIC to WACC ratio of -5.07, indicating significant inefficiencies. Ashford Inc. and Amplify Energy Corp. have ROIC to WACC ratios of 0.25 and 0.48, respectively. While these ratios are positive, they still suggest room for improvement in capital efficiency. Overall, Battalion Oil Corporation needs to enhance its capital utilization to improve its financial performance and shareholder value.
