GMS Inc (GMS)
Return on total capital
| Apr 30, 2025 | Jan 31, 2025 | Oct 31, 2024 | Jul 31, 2024 | Apr 30, 2024 | Jan 31, 2024 | Oct 31, 2023 | Jul 31, 2023 | Apr 30, 2023 | Jan 31, 2023 | Oct 31, 2022 | Jul 31, 2022 | Apr 30, 2022 | Jan 31, 2022 | Oct 31, 2021 | Jul 31, 2021 | Apr 30, 2021 | Jan 31, 2021 | Oct 31, 2020 | Jul 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 202,494 | 300,381 | 381,042 | 411,080 | 443,924 | 462,604 | 479,988 | 509,030 | 512,313 | 512,935 | 508,326 | 467,452 | 427,635 | 368,753 | 302,562 | 238,504 | 193,064 | 113,320 | 109,907 | 114,260 |
| Long-term debt | US$ in thousands | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 1,420,180 | 1,393,610 | 1,469,310 | 1,470,300 | 1,460,520 | 1,418,940 | 1,375,880 | 1,354,810 | 1,274,760 | 1,230,700 | 1,183,940 | 1,139,220 | 1,064,500 | 1,003,280 | 951,351 | 877,243 | 822,462 | 761,014 | 717,897 | 681,871 |
| Return on total capital | 14.26% | 21.55% | 25.93% | 27.96% | 30.39% | 32.60% | 34.89% | 37.57% | 40.19% | 41.68% | 42.94% | 41.03% | 40.17% | 36.75% | 31.80% | 27.19% | 23.47% | 14.89% | 15.31% | 16.76% |
April 30, 2025 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $202,494K ÷ ($—K + $1,420,180K)
= 14.26%
The analysis of GMS Inc.'s return on total capital (ROTC) over the period from July 31, 2020, through April 30, 2025, reveals a clear pattern of initial growth followed by a consistent decline. Initially, ROTC exhibited a rising trajectory, increasing from 16.76% in July 2020 to a peak of 42.94% in October 2022. This upward trend suggests that the company's efficiency in generating profits from its capital base improved substantially during this period, likely reflecting favorable operational conditions, cost management, and effective capital utilization.
Following the peak in October 2022, the ROTC began a gradual decline, dropping to 41.68% by January 2023 and continuing downward through subsequent reporting periods. As of April 2025, the ROTC stood at 14.26%, indicating a significant reduction in the company's ability to generate profit from its total capital base. This downward trend may be attributable to several factors, including increased capital investments that have yet to translate into proportional returns, rising costs, competitive pressures, or shifts in the market and operational efficiencies.
Overall, the company's ROTC pattern reflects a period of strong performance characterized by rapid growth until late 2022, followed by a sustained decline, suggesting potential challenges in maintaining previous levels of capital efficiency. This trend warrants further analysis into underlying operational, financial, and market dynamics to fully understand the causes of the decline and implications for long-term profitability and capital management.
Peer comparison
Apr 30, 2025