- The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) has a Return on Invested Capital (ROIC) of 2.28%, which is lower than its Weighted Average Cost of Capital (WACC) of 6.82%, indicating inefficient capital utilization.
- PJT Partners Inc. shows a significantly negative ROIC, suggesting poor financial performance compared to its peers.
- Employers Holdings, Inc. demonstrates the most efficient capital utilization with a ROIC of 44.44% against a WACC of 6.66%, making it an attractive investment opportunity.
The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) is a financial institution that provides a range of banking services. It operates primarily in Bermuda, the Cayman Islands, and the Channel Islands. NTB offers personal and business banking, wealth management, and trust services. In the competitive banking sector, NTB’s performance is often compared with peers like PJT Partners Inc., National Bank Holdings Corporation, FB Financial Corporation, Northrim BanCorp, Inc., and Employers Holdings, Inc.
NTB’s Return on Invested Capital (ROIC) is 2.28%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 6.82%. This indicates that NTB is not generating returns above its cost of capital, a potential concern for investors. A ROIC lower than WACC suggests that the company is not using its capital efficiently to generate profits.
In comparison, PJT Partners Inc. has a negative ROIC of -1354.55%, which is far below its WACC of 7.31%. This indicates poor financial performance, as the company is not generating any positive returns on its invested capital. On the other hand, National Bank Holdings Corporation has a positive ROIC of 13.57%, but it is still below its WACC of 16.77%. Despite this, NBHC performs better than NTB in terms of the ROIC to WACC ratio.
FB Financial Corporation presents a concerning scenario with a ROIC of 0% against a high WACC of 17.56%. This indicates no return on invested capital, which is not favorable for investors. In contrast, Northrim BanCorp, Inc. has a ROIC of 17.34%, which is higher than its WACC of 13.99%. This suggests efficient capital utilization and positive financial performance.
Employers Holdings, Inc. stands out with a ROIC of 44.44% and a WACC of 6.66%. This results in a ROIC to WACC ratio of 6.67, indicating the most efficient capital utilization among the peers. EIG’s ability to generate returns significantly above its cost of capital makes it an attractive investment opportunity based on this analysis.
