Smith AO Corporation (AOS)
Return on total capital
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 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 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 707,700 | 738,200 | 758,900 | 763,900 | 745,500 | 328,000 | 296,300 | 250,300 | 233,100 | 655,800 | 676,100 | 660,900 | 629,900 | 599,600 | 571,100 | 508,400 | 451,200 | 416,300 | 393,300 | 439,400 |
| Long-term debt | US$ in thousands | 183,200 | 109,700 | 130,400 | 109,700 | 117,300 | 119,600 | 196,000 | 330,800 | 334,500 | 281,000 | 291,600 | 288,600 | 189,900 | 99,600 | 99,600 | 99,600 | 106,400 | 107,100 | 274,300 | 335,600 |
| Total stockholders’ equity | US$ in thousands | 1,883,500 | 1,916,700 | 1,911,600 | 1,881,800 | 1,844,400 | 1,882,400 | 1,888,400 | 1,790,200 | 1,747,700 | 1,747,800 | 1,792,500 | 1,808,900 | 1,832,200 | 1,896,500 | 1,816,300 | 1,849,000 | 1,848,300 | 1,747,100 | 1,658,100 | 1,616,300 |
| Return on total capital | 34.24% | 36.43% | 37.16% | 38.36% | 38.00% | 16.38% | 14.22% | 11.80% | 11.19% | 32.32% | 32.44% | 31.51% | 31.15% | 30.04% | 29.81% | 26.09% | 23.08% | 22.45% | 20.35% | 22.51% |
December 31, 2024 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $707,700K ÷ ($183,200K + $1,883,500K)
= 34.24%
Smith AO Corporation has shown a fluctuating trend in its return on total capital over the period from March 2020 to December 2024. The return on total capital increased steadily from March 2020 to June 2021, reaching a peak of 29.81%. This indicated efficient use of both debt and equity capital to generate profits.
However, the return on total capital experienced a decline from September 2021 to December 2022, dropping to 11.19%. This downward trend may suggest potential issues impacting the company's profitability and efficiency in capital utilization during this period.
From March 2023 to December 2024, there was a significant improvement in the return on total capital, with a sharp increase to 38.36% in March 2024. This turnaround indicates a positive shift in the company's ability to generate higher returns relative to the total capital employed.
Overall, it is crucial for Smith AO Corporation to monitor its return on total capital closely and implement strategies to sustain or improve its profitability and efficiency in capital utilization to ensure long-term financial health and growth.
Peer comparison
Dec 31, 2024