Neogen Corporation (NEOG)

Return on total capital

		May 31, 2025	Feb 28, 2025	Nov 30, 2024	Aug 31, 2024	May 31, 2024	Feb 29, 2024	Nov 30, 2023	Aug 31, 2023	May 31, 2023	Feb 28, 2023	Nov 30, 2022	Aug 31, 2022	May 31, 2022	Feb 28, 2022	Nov 30, 2021	Aug 31, 2021	May 31, 2021	Feb 28, 2021	Nov 30, 2020	Aug 31, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	-447,217	-434,409	-430,396	46,887	64,236	140,019	143,680	111,084	110,523	39,959	30,652	65,967	67,918	70,146	79,543	77,019	74,169	73,858	71,127	70,154
Long-term debt	US$ in thousands	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Total stockholders’ equity	US$ in thousands	2,071,250	2,660,350	2,669,070	3,135,190	3,144,140	3,146,170	3,147,570	3,146,180	3,134,220	3,125,560	3,106,260	883,798	887,374	875,544	865,476	855,363	840,377	807,683	777,395	751,546
Return on total capital		-21.59%	-16.33%	-16.13%	1.50%	2.04%	4.45%	4.56%	3.53%	3.53%	1.28%	0.99%	7.46%	7.65%	8.01%	9.19%	9.00%	8.83%	9.14%	9.15%	9.33%

May 31, 2025 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $-447,217K ÷ ($—K + $2,071,250K)
= -21.59%

The analysis of Neogen Corporation's return on total capital (ROTC) over the period from August 31, 2020, through May 31, 2025, reveals significant fluctuations and an overall declining trend with notable periods of deterioration.

Initially, between August 31, 2020, and May 31, 2021, the ROTC remained relatively stable, primarily oscillating around 8.83% to 9.33%. The highest value within this timeframe was 9.33%, observed on August 31, 2020. During this period, the company demonstrated a consistent ability to generate returns on its total capital invested.

From the period extending into late 2021, the ROTC experienced minor fluctuations, with values such as 9.19% in November 2021 and a slight decline to 8.01% by February 28, 2022. The rate continued to decrease gradually through 2022, dropping to 7.65% on May 31, 2022, and further to 7.46% on August 31, 2022. This indicates a diminishing efficiency in capital utilization or a possible decline in profitability.

A sharp decline occurred subsequently; by November 30, 2022, the ROTC plummeted to 0.99%, and further to 1.28% in February 2023. This marks a significant reduction in the company's ability to generate returns from its total capital, signaling potential operational or market challenges.

In 2023, the ROTC saw a modest recovery, rising to 3.53% by May 31, 2023, and maintaining this level on August 31, 2023. The value increased further to 4.56% by November 30, 2023, with a slight decrease to 4.45% in February 2024. However, this recovery was short-lived, as the ROTC declined sharply to 2.04% by May 31, 2024, and further to 1.50% by August 31, 2024.

From late 2024 into early 2025, the company's ROTC deteriorated markedly, recording negative figures: -16.13% on November 30, 2024, and continuing into negative territory with -16.33% in February 2025 and -21.59% on May 31, 2025. These negative values indicate the company is experiencing significant losses relative to its total capital, reflecting severe operational or financial distress.

In summary, Neogen Corporation's return on total capital experienced an initial period of stability and moderate returns, followed by a consistent downward trend, culminating in substantial negative returns by early 2025. This progression suggests increasing challenges in generating profitable returns on the company's total capital base over the analyzed period.