- Tenable Holdings, Inc. (NASDAQ:TENB) has a negative Return on Invested Capital (ROIC) of -2.69% and a Weighted Average Cost of Capital (WACC) of 7.38%, indicating inefficiency in capital utilization.
- Varonis Systems, Inc. (VRNS) and Qualys, Inc. (QLYS) demonstrate effective capital utilization with positive ROIC to WACC ratios, highlighting strong capital efficiency.
- Elastic N.V. (ESTC) and Smartsheet Inc. (SMAR), similar to Tenable, show negative ROIC to WACC ratios, suggesting challenges in generating returns above their cost of capital.
Tenable Holdings, Inc. (NASDAQ:TENB) is a cybersecurity company that specializes in vulnerability management. It provides solutions to help organizations identify and manage cybersecurity risks. Despite its innovative offerings, Tenable faces challenges in capital efficiency, as seen in its financial metrics. The company’s negative Return on Invested Capital (ROIC) of -2.69% compared to its Weighted Average Cost of Capital (WACC) of 7.38% indicates it is not generating returns above its cost of capital.
The ROIC to WACC ratio is a key indicator of how well a company uses its capital. Tenable’s ratio of -0.36 suggests inefficiency in capital utilization. In contrast, its peer Rapid7, Inc. (RPD) has a positive ROIC of 1.67% and a WACC of 6.16%, resulting in a ROIC to WACC ratio of 0.27.
Varonis Systems, Inc. (VRNS) presents a more favorable picture with a ROIC of 8.98% and a WACC of 6.75%, leading to a ROIC to WACC ratio of 1.33. This indicates Varonis is effectively using its capital to generate returns. Qualys, Inc. (QLYS) outperforms its peers with a ROIC of 27.75% and a WACC of 6.39%, resulting in a ROIC to WACC ratio of 4.34, highlighting its strong capital efficiency.
Elastic N.V. (ESTC) and Smartsheet Inc. (SMAR) also face challenges similar to Tenable. Elastic has a negative ROIC of -11.70% and a WACC of 8.43%, leading to a ROIC to WACC ratio of -1.39. Smartsheet’s ROIC of -5.88% and WACC of 7.92% result in a ratio of -0.74. Both companies, like Tenable, are not generating returns above their cost of capital.
