Hologic’s ROIC of 10.04% surpasses its WACC of 7.88%, indicating efficient capital utilization and value creation.
ResMed Inc. showcases exceptional financial health with a ROIC of 20.06% and a WACC of 7.40%, reflecting superior capital efficiency.
Comparatively, companies like Henry Schein, Inc. and DENTSPLY SIRONA Inc. demonstrate less favorable ROIC to WACC ratios, suggesting challenges in generating returns above their cost of capital.
Hologic, Inc. (NASDAQ:HOLX) is a leading medical technology company that specializes in women’s health, offering innovative products across diagnostics, surgery, and medical imaging. The company competes with other healthcare giants such as Henry Schein, Inc., DENTSPLY SIRONA Inc., ResMed Inc., Laboratory Corporation of America Holdings, and The Cooper Companies, Inc. A critical analysis of Hologic’s financial metrics, particularly its Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC), sheds light on its financial health and operational efficiency.
Hologic’s impressive ROIC of 10.04% significantly exceeds its WACC of 7.88%, resulting in a ROIC to WACC ratio of 1.27. This performance indicates that Hologic is proficiently generating returns well above its cost of capital, a positive sign for investors. It suggests that the company is effectively deploying its capital to create substantial value, which is essential for long-term growth and sustainability.
In contrast, Henry Schein, Inc. reports a ROIC of 5.92% and a WACC of 7.12%, leading to a ROIC to WACC ratio of 0.83. This indicates that Henry Schein is not achieving returns that exceed its cost of capital, which could be a red flag for investors. Similarly, DENTSPLY SIRONA Inc. presents a negative ROIC of -17.66% against a WACC of 6.55%, resulting in a ROIC to WACC ratio of -2.70, highlighting inefficiencies in capital utilization.
On the other hand, ResMed Inc. stands out with a ROIC of 20.06% and a WACC of 7.40%, achieving a ROIC to WACC ratio of 2.71. This underscores ResMed’s exceptional capability in generating returns significantly above its cost of capital, positioning it as an attractive investment for those prioritizing efficient capital use. Conversely, Laboratory Corporation of America Holdings and The Cooper Companies, Inc. exhibit lower ROIC to WACC ratios of 0.66 and 0.51, respectively, indicating less efficient capital utilization compared to ResMed and Hologic.
