DXP Enterprises Inc (DXPE)
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 | 140,077 | 95,089 | 41,016 | -27,394 | 67,717 |
| Long-term debt | US$ in thousands | 520,697 | 409,205 | 315,397 | 317,139 | 235,419 |
| Total stockholders’ equity | US$ in thousands | 380,879 | 365,392 | 346,674 | 360,338 | 353,786 |
| Return on total capital | 15.54% | 12.28% | 6.20% | -4.04% | 11.49% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $140,077K ÷ ($520,697K + $380,879K)
= 15.54%
Return on total capital is a key financial ratio that reflects the ability of DXP Enterprises Inc to generate profit from all of its invested capital, including both debt and equity. The trend in the return on total capital over the past five years indicates fluctuations in the company's efficiency in utilizing its total capital to generate returns for its stakeholders.
In 2019, DXP Enterprises Inc achieved a return on total capital of 11.49%, demonstrating a reasonable profitability. This was followed by a decrease to -4.04% in 2020, indicating a period of negative returns on capital, which could raise concerns about the company's ability to generate profits relative to the capital invested.
However, the company's performance improved significantly in 2021 with a return on total capital of 6.20%. Subsequently, in 2022, there was a further increase to 12.28%, suggesting an enhancement in capital utilization efficiency by the company. The most recent data for 2023 shows a return on total capital of 15.54%, indicating a strong performance in generating returns from the total capital invested.
Overall, the upward trend in the return on total capital from 2020 onwards suggests that DXP Enterprises Inc has been able to enhance its operational efficiency and profitability, showcasing an improvement in utilizing its total capital effectively to generate returns for its investors. It is essential for the company to continue this positive trend to ensure sustained profitability and value creation for its stakeholders.
Peer comparison
Dec 31, 2023