Archrock Inc (AROC)
Return on total capital
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 253,735 | 221,693 | 195,856 | 183,162 | 161,848 | 153,194 | 147,117 | 132,568 | 147,096 | 147,688 | 158,312 | 109,647 | 19,734 | 23,568 | 23,463 | 74,725 | 162,866 | 169,621 | 156,983 | 142,122 |
| Long-term debt | US$ in thousands | 1,584,870 | 1,604,550 | 1,639,240 | 1,547,270 | 1,548,330 | 1,498,900 | 1,532,440 | 1,517,020 | 1,530,820 | — | — | — | 1,688,870 | — | — | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 871,021 | 861,093 | 855,533 | 853,050 | 860,693 | 869,816 | 873,918 | 872,323 | 891,438 | 904,047 | 913,821 | 923,124 | 935,557 | 949,685 | 950,873 | 999,472 | 1,085,960 | 1,057,020 | 832,890 | 842,292 |
| Return on total capital | 10.33% | 8.99% | 7.85% | 7.63% | 6.72% | 6.47% | 6.11% | 5.55% | 6.07% | 16.34% | 17.32% | 11.88% | 0.75% | 2.48% | 2.47% | 7.48% | 15.00% | 16.05% | 18.85% | 16.87% |
December 31, 2023 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $253,735K ÷ ($1,584,870K + $871,021K)
= 10.33%
The return on total capital for Archrock Inc has been steadily increasing over the quarters, reflecting an improving efficiency in generating profits from the total capital employed in the business. The trend indicates a positive trajectory in the company's ability to generate returns on the total investment made in its operations. The substantial increase in return on total capital from 5.53% in Q1 2022 to 10.52% in Q4 2023 signifies an enhanced utilization of capital, which could be attributed to improved operational efficiency, prudent capital allocation, or effective cost management strategies. This trend suggests that Archrock Inc is becoming more effective in utilizing its capital to generate returns for its investors.
Peer comparison
Dec 31, 2023