Pure Cycle Corporation's Financial Performance and Capital Efficiency

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  Posted by John Deo Feb 10 - Filed in General - #financialmodelingprep  - 18 views
  
  • Pure Cycle Corporation (NASDAQCYO) has a Return on Invested Capital (ROIC) of 6.42% and a Weighted Average Cost of Capital (WACC) of 8.59%, indicating potential capital utilization inefficiencies.
  • Comparatively, Artesian Resources Corporation exhibits the highest capital efficiency among peers with a ROIC to WACC ratio of 0.67.
  • Most competitors, including Cadiz Inc. and Global Water Resources, Inc., show significant inefficiencies in generating returns on their capital.

  Pure Cycle Corporation (NASDAQCYO) is a company involved in the development and management of water and land resources. It operates primarily in the water utility sector, providing water and wastewater services. The company competes with other firms in the industry, such as Cadiz Inc., Artesian Resources Corporation, Global Water Resources, Inc., Parke Bancorp, Inc., and Peoples Bancorp of North Carolina, Inc.

  In analyzing Pure Cycle's financial performance, the focus is on its Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC). Pure Cycle's ROIC is 6.42%, while its WACC is 8.59%. This results in a ROIC to WACC ratio of 0.75, indicating that the company is not generating returns that exceed its cost of capital. This suggests potential inefficiencies in how the company utilizes its capital.

  Comparatively, Cadiz Inc. has a negative ROIC of -21.18% against a WACC of 8.46%, resulting in a ROIC to WACC ratio of -2.51. This indicates significant inefficiencies and potential financial distress. Artesian Resources Corporation, with a ROIC of 3.16% and a WACC of 4.71%, has a ROIC to WACC ratio of 0.67, the highest among the peers, suggesting relatively better capital efficiency.

  Global Water Resources, Inc. has a ROIC of 1.84% and a WACC of 7.26%, leading to a ROIC to WACC ratio of 0.25. This indicates inefficiencies in generating returns on its capital. Parke Bancorp, Inc. and Peoples Bancorp of North Carolina, Inc. have ROIC to WACC ratios of 0.17 and 0.14, respectively, indicating they are not effectively generating returns above their cost of capital.

  Overall, while Pure Cycle Corporation is performing better than most of its peers in terms of capital efficiency, it still has room for improvement to exceed its cost of capital. Artesian Resources Corporation stands out with the highest ROIC to WACC ratio, suggesting it is relatively more efficient in its capital utilization compared to the others.