Hormel Foods Corporation (HRL)
Return on total capital
| Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,087,530 | 1,340,380 | 1,169,180 | 1,135,540 | 1,227,440 |
| Long-term debt | US$ in thousands | 2,358,720 | 3,290,550 | 3,315,150 | 1,044,940 | 250,000 |
| Total stockholders’ equity | US$ in thousands | 7,734,880 | 7,535,280 | 6,972,880 | 6,425,550 | 5,921,460 |
| Return on total capital | 10.77% | 12.38% | 11.36% | 15.20% | 19.89% |
October 29, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $1,087,530K ÷ ($2,358,720K + $7,734,880K)
= 10.77%
Certainly. To analyze Hormel Foods Corp.'s return on total capital, we can observe the trend in the return on total capital over the past five years. The return on total capital reflects the efficiency of the company in generating profits from the capital invested by both equity and debt holders.
The return on total capital for Hormel Foods Corp. has exhibited a declining trend over the past five years, decreasing from 19.38% in 2019 to 9.96% in 2023. This indicates that the company's ability to generate profit from the total capital employed has weakened over this period.
There are several potential factors that could have contributed to this trend, including changes in the company's capital structure, profitability, and overall operating efficiency. It would be important to further analyze the financial statements and industry dynamics to understand the specific drivers behind this trend in return on total capital.
Overall, the declining trend in Hormel Foods Corp.'s return on total capital raises concerns about the company's ability to utilize its capital effectively to generate returns for its investors and stakeholders. Further investigation into the company's financial and operational performance would be necessary to gain deeper insights into the reasons behind this trend and to identify potential strategic areas for improvement.