TrueCar, Inc. (NASDAQ:TRUE) is a digital automotive marketplace that connects consumers with dealers. It provides a platform for users to research new and used car prices and find local dealers. TrueCar competes with other online automotive platforms like CarGurus, Cars.com, and Angi. The company's financial performance is often compared to these peers to assess its market position.
TrueCar's Return on Invested Capital (ROIC) is -28.67%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 12.14%. This negative ROIC indicates that TrueCar is not generating sufficient returns to cover its cost of capital, which is a red flag for investors. The ROIC to WACC ratio of -2.36 further highlights this inefficiency in capital utilization.
In contrast, CarGurus, Inc. (CARG) shows a strong performance with an ROIC of 16.18% and a WACC of 11.30%. The ROIC to WACC ratio of 1.43 suggests that CarGurus is effectively generating returns that exceed its cost of capital. This makes CarGurus the most efficient in capital utilization among its peers, as highlighted by its positive financial metrics.
Cars.com Inc. (CARS) and Angi Inc. (ANGI) also have positive ROICs of 4.34% and 2.75%, respectively, but their ROIC to WACC ratios of 0.37 and 0.29 indicate that their returns are only slightly above their cost of capital. This suggests moderate efficiency in capital utilization compared to CarGurus.
On the other hand, trivago N.V. (TRVG) and Tuniu Corporation (TOUR) have negative ROICs of -11.21% and -4.49%, respectively. Their ROIC to WACC ratios of -1.03 and -0.39 indicate that they, like TrueCar, are struggling to generate returns above their cost of capital. This highlights the challenges these companies face in achieving efficient capital utilization.
