Allegro Microsystems Inc (ALGM)

Return on total capital

		Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 23, 2022	Sep 23, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	205,369	251,418	283,922	269,730	213,386	175,283	142,255	121,226	140,978	129,888	66,020	39,868
Long-term debt	US$ in thousands	249,611	250,464	25,000	25,000	25,000	25,000	25,000	25,000	25,000	25,000	25,000	25,000	25,000	25,000	—
Total stockholders’ equity	US$ in thousands	1,130,440	1,134,230	1,097,090	1,026,580	965,628	893,379	814,786	762,236	734,207	694,669	655,423	618,252	585,752	575,831	634,464
Return on total capital		14.88%	18.16%	25.30%	25.65%	21.54%	19.09%	16.94%	15.40%	18.57%	18.05%	9.70%	6.20%

March 31, 2024 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $205,369K ÷ ($249,611K + $1,130,440K)
= 14.88%

Allegro Microsystems Inc's return on total capital has exhibited fluctuations over the past several quarters. The return on total capital was relatively high, ranging from 18.05% to 25.65% in the most recent quarters, suggesting efficient utilization of both debt and equity capital to generate profits. However, there was a notable decline in the return on total capital in some quarters, such as 6.20% in June 2021 and 9.70% in September 2021, which could indicate potential challenges in effectively deploying capital during those periods.

Overall, the company's return on total capital has shown a positive trend, with recent quarters demonstrating stronger performance compared to earlier periods. It is essential for Allegro Microsystems Inc to sustain and potentially improve its return on total capital to ensure long-term profitability and value creation for its stakeholders.