Excelerate Energy, Inc. (NYSE:EE) is a company involved in the energy sector, focusing on providing liquefied natural gas (LNG) solutions. It operates in a competitive market alongside companies like PNM Resources, Inc. (PNM), IDACORP, Inc. (IDA), Black Hills Corporation (BKH), Avista Corporation (AVA), and Southwest Gas Holdings, Inc. (SWX). These companies are part of the utilities sector, which is known for its stable but competitive environment.
In evaluating Excelerate Energy's financial performance, the Return on Invested Capital (ROIC) of 5.21% is a key metric. EE's ROIC stands at 5.21%, which is lower than its Weighted Average Cost of Capital (WACC) of 7.17%. This indicates that the company is not generating returns that exceed its cost of capital, which is a concern for investors looking for efficient capital use.
Comparing EE to its peers, PNM Resources has a significantly negative ROIC of -122.19% against a WACC of 4.24%, resulting in a ROIC/WACC ratio of -28.82. This suggests PNM is struggling with capital efficiency. On the other hand, Black Hills Corporation shows a more favorable ROIC of 4.87% and a WACC of 5.40%, leading to a ROIC/WACC ratio of 0.90, the highest among the peers.
IDACORP, Inc. has a ROIC of 3.66% and a WACC of 5.62%, resulting in a ROIC/WACC ratio of 0.65. This is lower than EE's ratio of 0.73, indicating that EE is performing slightly better in terms of capital efficiency compared to IDA. Avista Corporation and Southwest Gas Holdings also have lower ROIC/WACC ratios of 0.81 and 0.59, respectively, compared to EE.
Overall, while Excelerate Energy's ROIC/WACC ratio of 0.73 is not the highest among its peers, it is above some, indicating there is room for improvement. Black Hills Corporation leads in capital efficiency, suggesting it is currently the best performer in generating returns relative to its cost of capital.
