TechnipFMC plc (NYSE:FTI) is a global leader in the energy sector, providing services and technologies to the oil and gas industry. The company specializes in subsea, onshore, offshore, and surface projects. TechnipFMC competes with companies like Oceaneering International, NOV Inc., Flowserve Corporation, Dril-Quip, and Core Laboratories, all of which operate in similar sectors, offering various services and products to the energy industry.
TechnipFMC's Return on Invested Capital (ROIC) is 13.07%, while its Weighted Average Cost of Capital (WACC) is 14.31%. This results in a ROIC to WACC ratio of 0.91, indicating that the company is not currently generating returns that exceed its cost of capital. This suggests that TechnipFMC is not as efficient in using its capital to generate profits as it could be.
In comparison, Oceaneering International has a ROIC of 9.66% and a WACC of 12.54%, resulting in a ROIC to WACC ratio of 0.77. This shows that Oceaneering is less efficient than TechnipFMC in generating returns relative to its cost of capital. Similarly, Flowserve Corporation and Core Laboratories have ROIC to WACC ratios of 0.81 and 0.61, respectively, indicating they are also less efficient than TechnipFMC.
NOV Inc. stands out among the peers with a ROIC to WACC ratio of 0.89, the highest among the group. Although NOV's ROIC of 8.41% does not exceed its WACC of 9.46%, it is still the most efficient in generating returns relative to its cost of capital. Dril-Quip, on the other hand, has a negative ROIC of -0.42% and a WACC of 7.20%, resulting in a ROIC to WACC ratio of -0.06, indicating significant inefficiency.
Overall, while TechnipFMC is relatively efficient compared to its peers, it still faces challenges in generating returns above its cost of capital. This analysis highlights the importance of improving capital efficiency to enhance profitability and competitiveness in the energy sector.
