Jumia Technologies AG (NYSE:JMIA) is a major e-commerce company that operates across the African continent. A key test for any company's financial performance is its ability to generate value. This can be measured by comparing the return it makes on its investments to the cost of the money it used to fund them.
This investment analysis comparison uses two main figures. The first is Return on Invested Capital (ROIC), which shows how much profit a company makes from its investments. The second is the Weighted Average Cost of Capital (WACC), which is the average cost of the money a company uses, from loans and from shareholders, reflecting its capital structure.
For Jumia Technologies AG, its current ROIC is -256.50% while its WACC is 16.72%. This indicates the company is not generating a positive return on its capital. This situation is common for businesses that are investing heavily in growth strategy and trying to capture a larger market share before focusing on immediate profitability.
Looking at similar companies provides a valuable peer comparison and shows a common trend in investment returns. Blink Charging Co. (NASDAQ:BLNK) has an ROIC of -89.16% and a WACC of 12.96%. Workhorse Group Inc. (NASDAQ:WKHS) has an ROIC of -84.58% against a WACC of 38.12%. Like Jumia Technologies AG, these companies currently show negative returns as they focus on expansion and market penetration.
Within this group, fuboTV Inc. (NYSE:FUBO) stands out as the most efficient. It has an ROIC of -1.73% and a WACC of 7.60%. Although its return is also negative, it is much closer to becoming profitable on its investments than its peers, showing a more effective use of its capital and a clearer path to profitability.
