Comparative Analysis of ROIC and WACC Across Financial Institutions

• The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) has a ROIC of 2.28% which is significantly lower than its WACC of 6.86%, indicating inefficiency in generating returns above its cost of capital.
• PJT Partners Inc. shows a negative ROIC of -1354.55%, far below its WACC of 7.28%, highlighting poor capital efficiency.
• Employers Holdings, Inc. outperforms with a ROIC of 44.44% compared to its WACC of 6.70%, showcasing strong financial performance and efficient capital use.

The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) is a key player in the banking sector, offering a wide range of services including personal and business banking, wealth management, and trust services across Bermuda, the Cayman Islands, and the Channel Islands. Despite the competitive landscape with rivals such as PJT Partners Inc., National Bank Holdings Corporation, FB Financial Corporation, Northrim BanCorp, Inc., and Employers Holdings, Inc., NTB's financial performance in terms of capital efficiency raises concerns.

NTB's Return on Invested Capital (ROIC) of 2.28% is notably lower than its Weighted Average Cost of Capital (WACC) of 6.86%, signaling that the company is not generating sufficient returns over its cost of capital. This is a critical indicator of a company's ability to use its capital efficiently to generate profits. In contrast, Employers Holdings, Inc. demonstrates a remarkable ROIC of 44.44% against its WACC of 6.70%, positioning it as the most efficient entity in generating returns above its cost of capital among its peers.

While PJT Partners Inc. and FB Financial Corporation show negative and zero ROIC respectively, indicating poor financial performance and no return on invested capital, Northrim BanCorp, Inc. presents a positive picture with a ROIC of 17.34%, surpassing its WACC of 13.83%. This suggests a more efficient use of capital and positive value creation compared to NTB.

In summary, the analysis of ROIC and WACC across these financial institutions reveals significant variances in their capital efficiency and financial performance. NTB, with a ROIC to WACC ratio of 0.33, underperforms in generating returns above its cost of capital, highlighting a potential area of concern for investors. In contrast, Employers Holdings, Inc., with the highest ROIC to WACC ratio of 6.64, stands out as the most efficient in this peer group.