Neogen Corporation (NEOG)

Return on total capital

		May 31, 2025	May 31, 2024	May 31, 2023	May 31, 2022	May 31, 2021
Earnings before interest and tax (EBIT)	US$ in thousands	—	61,370	37,515	84,199	77,254
Long-term debt	US$ in thousands	—	—	—	—	—
Total stockholders’ equity	US$ in thousands	2,071,250	3,144,140	3,134,220	887,374	840,377
Return on total capital		0.00%	1.95%	1.20%	9.49%	9.19%

May 31, 2025 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $—K ÷ ($—K + $2,071,250K)
= 0.00%

The analysis of Neogen Corporation’s return on total capital over the specified period reveals notable fluctuations. As of May 31, 2021, the return on total capital stood at 9.19%, indicating a relatively efficient utilization of capital at that time. This metric slightly increased to 9.49% by May 31, 2022, suggesting a marginal improvement in the company's ability to generate profits from its total capital base.

However, a significant decline is observed subsequently, with the return plummeting to 1.20% on May 31, 2023. This substantial decrease may signal challenges in operational performance, increased capital costs, or shifts in the company's investment efficiency. Further deterioration is evident as the return slightly improves to 1.95% on May 31, 2024, yet remains markedly lower than earlier years. Notably, by May 31, 2025, the return on total capital is recorded at 0.00%, indicating either a potential cessation of profit generation from total capital or that the company reported no net income relative to its capital base for that fiscal year.

Overall, the trend from 2021 through 2025 demonstrates a persistent decline in the efficiency of capital utilization, culminating in a negligible or zero return in the most recent year. Such a pattern warrants a detailed review of underlying factors such as operational costs, revenue streams, investment strategies, and potential extraordinary items that could influence the company's ability to generate returns from its total capital base.