Ciena Corporation (NYSE:CIEN) is a global supplier of telecommunications networking equipment, software, and services. The company is known for its innovative solutions in optical networking and data center interconnect. Ciena competes with other technology firms like Juniper Networks, Corning Incorporated, NetApp, Extreme Networks, and Lufax Holding Ltd in the telecommunications and networking industry.
Ciena's Return on Invested Capital (ROIC) is 3.79%, which is notably lower than its Weighted Average Cost of Capital (WACC) of 8.94%. This results in a ROIC/WACC ratio of 0.42, indicating that Ciena is not generating returns that exceed its cost of capital. This could be a concern for investors as it suggests that the company is not using its capital as efficiently as it could be.
In comparison, Juniper Networks has a ROIC of 4.39% and a WACC of 7.21%, resulting in a ROIC/WACC ratio of 0.61. This suggests that Juniper is closer to covering its cost of capital than Ciena. Corning Incorporated also performs better with a ROIC of 5.64% and a WACC of 8.23%, leading to a ROIC/WACC ratio of 0.69. NetApp, Inc. stands out with a ROIC of 18.71% and a WACC of 9.70%, resulting in a ROIC/WACC ratio of 1.93.
This indicates that NetApp is generating returns significantly above its cost of capital, suggesting efficient capital utilization. On the other hand, Extreme Networks and Lufax Holding Ltd have negative and very low ROIC/WACC ratios, respectively, indicating challenges in covering their cost of capital.
