Cactus, Inc. (NYSE:WHD) is a leading company in the oil and gas industry, known for designing, manufacturing, and selling wellhead and pressure control equipment. It competes with notable companies such as Select Energy Services, Inc. (WTTR), ChampionX Corporation (CHX), ProPetro Holding Corp. (PUMP), and Magnolia Oil & Gas Corporation (MGY).
Key Insights:
Cactus, Inc. demonstrates strong financial efficiency with a Return on Invested Capital (ROIC) of 15.42%, surpassing its Weighted Average Cost of Capital (WACC) of 13.41%.
Among its peers, Magnolia Oil & Gas Corporation leads with the highest ROIC to WACC ratio of 1.44, indicating superior efficiency in generating returns above its cost of capital.
ProPetro Holding Corp. shows a concerning financial performance with a negative ROIC of -12.08%, highlighting potential risks for investors.
Cactus, Inc. showcases a commendable financial performance with a ROIC of 15.42%, significantly higher than its WACC of 13.41%. This results in a ROIC to WACC ratio of 1.15, indicating that Cactus is effectively utilizing its capital to generate profits above its cost of capital. This is a positive sign for investors, suggesting that the company is managing its resources efficiently.
In contrast, Select Energy Services, Inc. has a ROIC of 4.66% and a WACC of 11.55%, leading to a ROIC to WACC ratio of 0.40. This indicates that Select Energy is struggling to generate sufficient returns to cover its cost of capital, which could be a concern for investors.
Similarly, ChampionX Corporation, with a ROIC of 12.96% and a WACC of 14.22%, has a ratio of 0.91, showing it is also not covering its cost of capital effectively.
ProPetro Holding Corp. presents a negative ROIC of -12.08% against a WACC of 11.74%, resulting in a ROIC to WACC ratio of -1.03. This negative ratio is a red flag, indicating that ProPetro is not only failing to cover its cost of capital but is also losing value on its investments.
Magnolia Oil & Gas Corporation stands out with a ROIC of 18.13% and a WACC of 12.62%, achieving the highest ROIC to WACC ratio of 1.44 among the peers analyzed. This demonstrates Magnolia’s exceptional efficiency in generating returns well above its cost of capital, positioning it as the most financially efficient company in this comparison. Cactus, Inc. follows closely, underscoring its strong performance and potential attractiveness to investors.
