The Marygold Companies, Inc. (NYSE:MGLD) operates across various sectors, offering a diverse range of services and products. Its financial performance is often benchmarked against peers to evaluate its capital efficiency. A critical measure for this assessment is the comparison between the Return on Invested Capital (ROIC) and the Weighted Average Cost of Capital (WACC). This comparison is pivotal in understanding how effectively a company generates returns relative to its capital costs.
MGLD's ROIC of -21.40% falls significantly below its WACC of 7.70%, highlighting a negative ROIC. This discrepancy suggests that MGLD is not generating sufficient returns on its invested capital, leading to a ROIC to WACC ratio of -2.78. Such a ratio underscores inefficiencies in the company's capital utilization, failing to cover its cost of capital and raising red flags for investors.
In contrast, Direct Digital Holdings, Inc. (DRCT) exhibits a more pronounced negative ROIC of -52.92% against a WACC of 14.90%, resulting in a ROIC to WACC ratio of -3.55. This indicates even lower efficiency in capital utilization compared to MGLD. Conversely, NeuroSense Therapeutics Ltd. (NRSN) demonstrates exceptional efficiency with a ROIC of 406.38% and a WACC of 14.69%, achieving a ROIC to WACC ratio of 27.66, showcasing its superior ability to generate returns on invested capital.
Similarly, Kidpik Corp. (PIK) and AgriFORCE Growing Systems Ltd. (AGRI) report negative ROICs of -0.14% and -192.54%, respectively. Their WACCs stand at 14.19% and 123.18%, leading to ROIC to WACC ratios of -0.01 and -1.56. These figures, akin to MGLD's, indicate struggles in surpassing their capital costs. However, Hour Loop, Inc. (HOUR) presents a positive outlook with a ROIC of 15.81% and a WACC of 10.11%, resulting in a ROIC to WACC ratio of 1.56, signifying efficient capital utilization.
