Magnolia Oil & Gas Corp (MGY)

Return on total capital

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Earnings before interest and tax (EBIT) (ttm) US$ in thousands 511,988 526,009 545,130 532,112 534,487 594,306 757,923 964,849 1,073,786 1,077,893 937,636 738,568 602,594 443,245 293,693 138,567 -1,925,669 -1,945,649 -1,939,921 -1,870,354
Long-term debt US$ in thousands 392,513 394,793 394,131 393,480 392,839 392,209 391,590 390,982 390,383 389,794 389,216 388,647 388,087 387,537 386,996 391,448 391,115 390,787 390,464 390,147
Total stockholders’ equity US$ in thousands 1,913,560 1,908,060 1,818,050 1,701,240 1,691,650 1,664,150 1,634,470 1,599,340 1,576,030 1,271,010 1,098,250 897,564 816,733 694,612 623,532 609,789 548,136 532,608 527,019 543,166
Return on total capital 22.20% 22.84% 24.64% 25.40% 25.64% 28.90% 37.41% 48.48% 54.61% 64.90% 63.04% 57.42% 50.02% 40.96% 29.06% 13.84% -205.02% -210.71% -211.44% -200.40%

December 31, 2024 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $511,988K ÷ ($392,513K + $1,913,560K)
= 22.20%

Return on total capital is a key financial metric that measures a company's ability to generate profits from its investments in both debt and equity. Looking at the historical data for Magnolia Oil & Gas Corp, we observe a significant improvement in the return on total capital over the reporting periods.

The company experienced negative returns on total capital in the first four quarters of 2020, indicating that it was not effectively utilizing its capital to generate profits during that period. However, starting from the first quarter of 2021, the return on total capital turned positive and saw a steady increase in subsequent quarters.

Magnolia Oil & Gas Corp's return on total capital reached 64.90% in the third quarter of 2022, which was the highest point during the period under review. This indicates that the company was able to generate significant profits relative to its total invested capital at that time.

Although there was a slight decrease in the return on total capital in the following quarters, the company managed to maintain a healthy level above 20% until the end of 2024. This demonstrates Magnolia Oil & Gas Corp's ability to efficiently utilize its capital to generate returns for its investors.

Overall, the trend of increasing return on total capital reflects positively on the company's financial performance and efficiency in deploying its capital to drive profitability.