- SI-BONE, Inc. (NASDAQ:SIBN) currently shows a negative Return on Invested Capital (ROIC) of -8.99%, indicating it is not yet generating a positive return on capital.
- The crucial ROIC to WACC ratio for SI-BONE, Inc. stands at -1.10, suggesting it is destroying, rather than creating, shareholder value at this stage.
- Among its peers, only Tactile Systems Technology, Inc. (NASDAQ:TCMD) effectively creates value, with an ROIC of 7.93% slightly exceeding its WACC of 7.92%.
SI-BONE, Inc. (NASDAQ:SIBN) is a medical device company that develops products to treat musculoskeletal joint disorders. The company operates in a competitive medical technology sector. A key way to measure its health is by comparing its financial returns to the cost of its capital.
A company’s financial health can be checked by comparing two key numbers. Return on Invested Capital (ROIC) shows how much profit a company earns from the money invested in its operations. The Weighted Average Cost of Capital (WACC) is the average price a company pays for its funding.
When a company’s ROIC is higher than its WACC, it is creating value for its shareholders. SI-BONE, Inc. currently has a negative ROIC of -8.99% while its WACC is 8.14%. This means the company is not yet generating a positive return on the capital it employs.
This situation results in an ROIC to WACC ratio of -1.10. This indicates SI-BONE, Inc. is currently destroying value rather than creating it, a common phase for high-growth companies. Within its peer group, only one company, Tactile Systems Technology, Inc. (NASDAQ:TCMD), is creating value.
Tactile Systems Technology, Inc. shows an ROIC of 7.93%, which slightly exceeds its WACC of 7.92%. This makes it a standout performer. Unlike SI-BONE, Inc. and other peers like Axonics, Inc. (NASDAQ:AXNX), which has an ROIC of -2.68%, Tactile Systems Technology, Inc. effectively uses its capital to cover its costs and generate a return.
