The cybersecurity sector is booming, but not all companies are equally efficient in turning investments into profits. A deep dive into key financial metrics reveals stark differences in capital utilization among leading firms. Tenable Holdings, Inc. (NASDAQ:TENB), a major player in vulnerability management, struggles with capital efficiency, posting a -2.69% Return on Invested Capital (ROIC) against a 7.38% Weighted Average Cost of Capital (WACC). This negative spread signals that Tenable is failing to generate returns above its capital costs, raising concerns about its financial performance.
Meanwhile, competitors like Varonis Systems, Inc. (VRNS) and Qualys, Inc. (QLYS) showcase far stronger capital efficiency. Varonis boasts an impressive ROIC of 8.98% versus a 6.75% WACC, while Qualys delivers an exceptional 27.75% ROIC against a 6.39% WACC. These figures highlight their ability to deploy capital effectively, outpacing peers in profitability. Rapid7, Inc. (RPD) also performs reasonably well with a positive ROIC of 1.67% and a WACC of 6.16%, though its margins are slimmer than those of Varonis and Qualys.
On the other end of the spectrum, Elastic N.V. (ESTC) and Smartsheet Inc. (SMAR) mirror Tenable’s struggles. Elastic’s ROIC of -11.70% against an 8.43% WACC reveals significant inefficiency, while Smartsheet’s -5.88% ROIC and 7.92% WACC further underscore challenges in achieving profitable growth. For investors, these metrics serve as critical indicators of which firms are best positioned to thrive in the competitive cybersecurity landscape.
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