California Water Service Group (CWT)
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 | 77,135 | 127,660 | 126,770 | 136,666 | 99,412 |
| Long-term debt | US$ in thousands | 1,052,770 | 1,052,490 | 1,055,790 | 781,100 | 786,754 |
| Total stockholders’ equity | US$ in thousands | 1,426,730 | 1,317,590 | 1,177,590 | 921,344 | 779,906 |
| Return on total capital | 3.11% | 5.39% | 5.68% | 8.03% | 6.35% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $77,135K ÷ ($1,052,770K + $1,426,730K)
= 3.11%
The return on total capital for California Water Service Group has shown a declining trend over the past five years, from 6.86% in 2019 to 3.60% in 2023. This indicates a decrease in the company's ability to generate profits relative to its total capital employed.
The decreasing trend in return on total capital suggests that the company may be experiencing challenges in efficiently utilizing its capital to generate returns for its investors. This could be a result of various factors such as increasing operating expenses, declining revenue growth, or inefficient capital allocation decisions.
Investors and stakeholders may closely monitor this trend and seek further insights into the company's operational and financial performance to understand the reasons behind the declining return on total capital. It is essential for the company to address the underlying factors affecting its return on total capital to enhance its profitability and long-term financial sustainability.
Peer comparison
Dec 31, 2023