Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) is a biopharmaceutical company that focuses on developing and acquiring technologies that aid in the discovery and development of medicines. The company operates in a competitive landscape with peers like Neurocrine Biosciences, Incyte Corporation, Alkermes plc, Myriad Genetics, and United Therapeutics Corporation.
In evaluating Ligand's financial performance, the Return on Invested Capital (ROIC) is a critical metric. Ligand's ROIC is -3.48%, which is below its Weighted Average Cost of Capital (WACC) of 7.60%. This negative ROIC indicates that Ligand is not generating enough returns to cover its cost of capital, which could be concerning for investors.
Comparatively, Neurocrine Biosciences has a ROIC of 9.78% and a WACC of 5.47%, resulting in a ROIC to WACC ratio of 1.79. This suggests that Neurocrine is effectively using its capital to generate returns above its cost of capital. Similarly, Incyte Corporation and United Therapeutics Corporation also show strong ROIC to WACC ratios of 2.50 and 2.28, respectively.
Alkermes plc stands out with the highest ROIC to WACC ratio of 2.93, indicating efficient capital utilization. This suggests that Alkermes is generating returns significantly above its cost of capital, making it an attractive investment prospect. In contrast, Myriad Genetics has a negative ROIC of -71.95%, which is far below its WACC of 10.96%, resulting in a ROIC to WACC ratio of -6.57, highlighting inefficiencies in capital utilization.
