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Elastic N.V. (ESTC) Financial Analysis in the Tech Industry
Mar 10, 2025 8:00 PM - Stuart Mooney(Last modified: Mar 11, 2025 3:13 PM)
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- Elastic N.V. (NYSE:ESTC) has a Return on Invested Capital (ROIC) of -10.46% and a Weighted Average Cost of Capital (WACC) of 9.37%, indicating inefficient capital utilization.
- Comparative analysis shows that Datadog is the only company among peers generating returns above its cost of capital, with a ROIC of 1.24% and a WACC of 9.50%.
- Other competitors like MongoDB, Smartsheet, Alteryx, and HubSpot also struggle with generating returns above their cost of capital, though their ratios vary.
Elastic N.V. (NYSE:ESTC) is a company known for its search-powered solutions, which help businesses enhance their data search capabilities. The company operates in a competitive landscape alongside peers like MongoDB, Smartsheet, Alteryx, Datadog, and HubSpot. These companies are all part of the tech industry, focusing on data management and analytics solutions.
Elastic N.V. has a Return on Invested Capital (ROIC) of -10.46% and a Weighted Average Cost of Capital (WACC) of 9.37%. This results in a ROIC to WACC ratio of -1.12, indicating that the company is not generating returns above its cost of capital. This is a red flag for investors, as it suggests inefficient capital utilization.
Comparatively, MongoDB has a ROIC of -7.36% and a WACC of 9.75%, leading to a ROIC to WACC ratio of -0.76. Smartsheet's figures are -5.88% for ROIC and 7.92% for WACC, with a ratio of -0.74. Both companies, like Elastic, are not generating returns above their cost of capital, but their ratios are slightly better than Elastic's.
Alteryx presents a ROIC of -8.11% and a WACC of 5.84%, resulting in a ROIC to WACC ratio of -1.39. This is worse than Elastic's ratio, indicating even less efficient capital utilization. Meanwhile, HubSpot has a ROIC of -0.47% and a WACC of 12.33%, with a ratio of -0.04, showing a closer balance between returns and capital cost.
Datadog stands out with a positive ROIC of 1.24% and a WACC of 9.50%, resulting in a ROIC to WACC ratio of 0.13. This indicates that Datadog is the only company among the peers generating returns above its cost of capital, suggesting better capital efficiency and potential for growth.
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