Extreme Networks, Inc. (NASDAQ:EXTR) is a company that provides network infrastructure equipment and software, competing with other technology firms like Juniper Networks, Ciena Corporation, Harmonic Inc., F5, Inc., and NetApp, Inc. A key financial metric to assess its performance is the Return on Invested Capital (ROIC) compared to the Weighted Average Cost of Capital (WACC). Extreme Networks has a ROIC of -5.01% and a WACC of 11.37%, resulting in a ROIC to WACC ratio of -0.44. This negative ratio indicates that the company is not generating enough returns to cover its cost of capital, which could be concerning for investors. It suggests that the company is not using its capital efficiently to generate profits.
In comparison, Juniper Networks has a ROIC of 4.39% and a WACC of 7.21%, with a ROIC to WACC ratio of 0.61. Similarly, Ciena Corporation has a ROIC of 2.97% and a WACC of 8.50%, resulting in a ratio of 0.35, which is lower than Juniper's.
Harmonic Inc. and F5, Inc. demonstrate even more efficient capital use. Harmonic has a ROIC of 11.55% and a WACC of 7.92%, with a ratio of 1.46, while F5, Inc. has a ROIC of 13.70% and a WACC of 8.48%, resulting in a ratio of 1.61. These figures indicate that both companies are generating returns well above their cost of capital, suggesting strong financial health.
NetApp, Inc. stands out with a ROIC of 16.49% and a WACC of 9.52%, leading to a ROIC to WACC ratio of 1.73. This is the highest among the peers, indicating that NetApp is highly efficient in using its capital to generate returns. This strong performance suggests that NetApp is creating significant value for its shareholders, making it an attractive option for investors.
