CS Disco, Inc. (NYSE:LAW) has a ROIC of -39.56% and a WACC of 13.57%, indicating poor capital utilization.
Couchbase, Inc. (BASE) shows even lower efficiency with a ROIC of -59.87% against a WACC of 8.03%.
EverCommerce Inc. (EVCM) stands out positively with a ROIC of 4.95% and a WACC of 9.08%, showcasing effective capital utilization.
CS Disco, Inc. (NYSE:LAW) is a technology company that provides cloud-based software solutions for legal professionals. The company aims to streamline legal processes through its innovative platform, offering tools for e-discovery, case management, and more. In the competitive landscape, CS Disco faces peers like Couchbase, VTEX, EverCommerce, Cytek Biosciences, and Xometry, each with varying financial metrics.
CS Disco’s ROIC of -39.56% is significantly lower than its WACC of 13.57%, resulting in a ROIC to WACC ratio of -2.92. This negative ratio indicates that the company is not effectively using its capital to generate returns, as the cost of capital far exceeds the returns generated. This inefficiency in capital utilization is a red flag for investors.
In comparison, Couchbase, Inc. (BASE) has an even lower ROIC of -59.87% against a WACC of 8.03%, leading to a ROIC to WACC ratio of -7.46. This suggests that Couchbase is also struggling with capital efficiency, even more so than CS Disco. On the other hand, VTEX and EverCommerce show positive ROIC to WACC ratios, with EverCommerce leading at 0.55, indicating better capital utilization.
Cytek Biosciences, Inc. (CTKB) and Xometry, Inc. (XMTR) also have negative ROIC to WACC ratios, at -0.42 and -1.35 respectively. While these figures are concerning, they are not as severe as those of CS Disco and Couchbase. This suggests that while these companies face challenges, they are not as pronounced in terms of capital inefficiency.
EverCommerce Inc. (EVCM) stands out with a ROIC of 4.95% and a WACC of 9.08%, resulting in the highest ROIC to WACC ratio among the peers at 0.55. This positive ratio indicates that EverCommerce is effectively using its capital to generate returns that exceed its cost of capital, positioning it well for potential growth and investor confidence.
