Hilton Grand Vacations Inc (HGV)
Return on total capital
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 216,000 | 627,000 | 623,000 | 374,000 | -237,000 |
| Long-term debt | US$ in thousands | 4,601,000 | 3,049,000 | 2,651,000 | 2,913,000 | 1,159,000 |
| Total stockholders’ equity | US$ in thousands | 1,752,000 | 2,115,000 | 2,151,000 | 1,988,000 | 374,000 |
| Return on total capital | 3.40% | 12.14% | 12.97% | 7.63% | -15.46% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $216,000K ÷ ($4,601,000K + $1,752,000K)
= 3.40%
Hilton Grand Vacations Inc's return on total capital has displayed a fluctuating trend over the past five years, according to the provided data. Starting at -15.46% on December 31, 2020, the company's return on total capital improved significantly to 7.63% by the end of 2021. This positive momentum carried forward, with the return on total capital further increasing to 12.97% by December 31, 2022, indicating improved efficiency in generating profits relative to the invested capital.
However, in the subsequent years, Hilton Grand Vacations Inc's return on total capital experienced some volatility. It stood at 12.14% by December 31, 2023, remaining at a relatively high level before dropping to 3.40% by the end of 2024.
Overall, while the company demonstrated a noteworthy improvement in its return on total capital from 2020 to 2022, the subsequent fluctuations in the following years suggest some inconsistency in generating returns relative to the total capital employed in the business. Further analysis and context would be beneficial to understand the underlying factors contributing to these fluctuations and to assess the company's capital efficiency and profitability in a more comprehensive manner.