- BlackBerry Limited (NYSE:BB) faces significant challenges in capital utilization, with a Return on Invested Capital (ROIC) of -16.15% and a Weighted Average Cost of Capital (WACC) of 8.57%.
- Compared to peers like AMC Entertainment Holdings and GameStop Corp., BlackBerry’s ROIC to WACC ratio of -1.88 indicates poor capital efficiency.
- Palantir Technologies Inc. showcases strong potential for growth with the highest ROIC to WACC ratio of 0.41 among the compared companies.
BlackBerry Limited (NYSE:BB) is a Canadian company known for its software and services, particularly in cybersecurity and the Internet of Things (IoT). Once a leader in the smartphone market, BlackBerry has shifted its focus to software solutions. In the competitive landscape, it faces peers like AMC Entertainment Holdings, GameStop Corp., SNDL Inc., Clover Health Investments, and Palantir Technologies Inc.
BlackBerry’s Return on Invested Capital (ROIC) is -16.15%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 8.57%. This negative ROIC indicates that BlackBerry is not generating enough returns to cover its cost of capital. The ROIC to WACC ratio of -1.88 further highlights this inefficiency in capital utilization.
In comparison, AMC Entertainment Holdings has a ROIC of -1.64% and a WACC of 6.03%, resulting in a ROIC to WACC ratio of -0.27. Although AMC’s returns are also below its cost of capital, the gap is narrower than BlackBerry’s, indicating relatively better capital efficiency.
GameStop Corp. shows a positive ROIC of 0.80% against a WACC of 4.84%, leading to a ROIC to WACC ratio of 0.17. This suggests that GameStop is generating higher returns to its cost of capital. This positive ratio indicates more effective capital utilization. Palantir Technologies Inc. stands out with a ROIC of 6.72% and a WACC of 16.19%, resulting in the highest ROIC to WACC ratio of 0.41 among the peers.
