MP Materials Corp (MP)
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 | -70,337 | 38,329 | 346,938 | 169,099 | -34,452 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 1,054,880 | 1,365,780 | 1,312,630 | 1,008,730 | 853,877 |
| Return on total capital | -6.67% | 2.81% | 26.43% | 16.76% | -4.03% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $-70,337K ÷ ($—K + $1,054,880K)
= -6.67%
MP Materials Corp's return on total capital has shown significant fluctuations over the past five years.
In December 31, 2020, the company's return on total capital was negative at -4.03%, indicating that the company was not efficiently utilizing its total capital to generate profits.
However, by December 31, 2021, MP Materials Corp's return on total capital had improved significantly to 16.76%. This indicated that the company had effectively increased its profitability relative to the total capital employed during that year.
The following year, by December 31, 2022, the return on total capital further improved to 26.43%, demonstrating a strong performance in terms of generating returns on the total capital invested.
The trend reversed in December 31, 2023, with a decline in return on total capital to 2.81%. This could be an indication of challenges faced by the company in efficiently utilizing its total capital to generate profits during that year.
By December 31, 2024, the company's return on total capital further deteriorated to -6.67%, signaling a concerning decline in profitability relative to the total capital employed.
Overall, MP Materials Corp's return on total capital has shown volatility over the past five years, with significant fluctuations in performance. The company should closely monitor its capital allocation strategies to ensure sustainable and improved profitability in the future.
Peer comparison
Dec 31, 2024