Cognex Corporation (CGNX)
Return on total capital
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 130,702 | 246,229 | 315,101 | 170,529 | 142,602 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 1,504,750 | 1,438,390 | 1,430,090 | 1,262,200 | 1,355,710 |
| Return on total capital | 8.69% | 17.12% | 22.03% | 13.51% | 10.52% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $130,702K ÷ ($—K + $1,504,750K)
= 8.69%
Cognex Corp.'s return on total capital has shown variability over the past five years. The return on total capital decreased significantly from 22.03% in 2021 to 8.15% in 2023. This downward trend might indicate a decrease in the company's efficiency in generating returns from its total capital employed.
The high return on total capital figures in 2021 and 2022 (22.03% and 18.68% respectively) suggest that Cognex Corp. was effectively utilizing its total capital to generate profits during those years. However, the substantial drop in 2023 to 8.15% raises concerns about the company's ability to maintain previous levels of performance.
It would be advisable for stakeholders and management to further analyze the factors contributing to this decline in return on total capital to identify any underlying issues that may be affecting the company's profitability and efficiency in capital utilization.
Peer comparison
Dec 31, 2023