RE/MAX Holdings, Inc. has a ROIC of 11.67% and a WACC of 23.13%, indicating it is not generating returns that exceed its cost of capital.
Urban Edge Properties (UE) and Kennedy-Wilson Holdings, Inc. (KW) demonstrate strong capital efficiency with ROIC significantly higher than their WACC.
ServisFirst Bancshares, Inc. (SFBS) and Rexford Industrial Realty, Inc. (REXR) show inefficiencies with negative or low ROIC compared to their WACC.
RE/MAX Holdings, Inc. is a leading real estate company known for its extensive network of franchisee-owned and operated offices. The company provides real estate brokerage services and is recognized for its strong brand presence in the real estate industry. However, when evaluating its financial performance, particularly its Return on Invested Capital (ROIC) compared to its Weighted Average Cost of Capital (WACC), some concerns arise.
RE/MAX has a ROIC of 11.67% and a WACC of 23.13%, resulting in a ROIC to WACC ratio of 0.50. This indicates that the company is not generating returns that exceed its cost of capital, which could be a red flag for investors. In comparison, National Bank Holdings Corporation (NBHC) has a ROIC of 16.84% and a WACC of 16.79%, with a ratio of 1.00, suggesting it is just covering its cost of capital.
Urban Edge Properties (UE) and Kennedy-Wilson Holdings, Inc. (KW) demonstrate strong capital efficiency. UE has a ROIC of 62.62% and a WACC of 8.49%, resulting in a ratio of 7.38, while KW boasts a ROIC of 91.81% and a WACC of 9.53%, with a ratio of 9.64. These figures highlight their ability to generate returns far exceeding their cost of capital, making them attractive to investors.
On the other hand, ServisFirst Bancshares, Inc. (SFBS) and Rexford Industrial Realty, Inc. (REXR) show inefficiencies. SFBS has a negative ROIC of -0.86% against a WACC of 8.35%, resulting in a ratio of -0.10, indicating a failure to generate positive returns. REXR has a ROIC of 2.94% and a WACC of 7.19%, with a ratio of 0.41, also reflecting inefficiency in capital utilization.
In summary, while RE/MAX Holdings, Inc. is a prominent player in the real estate sector, its current financial metrics, particularly the ROIC to WACC ratio, suggest it is not effectively utilizing its capital. Investors may find companies like Kennedy-Wilson Holdings, Inc. more appealing due to their superior capital efficiency and ability to generate higher returns.
