Ormat Technologies Inc (ORA)
Return on total capital
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 229,263 | 168,326 | 169,600 | 230,412 | 214,092 |
| Long-term debt | US$ in thousands | — | — | — | 1,377,210 | 1,011,930 |
| Total stockholders’ equity | US$ in thousands | 2,315,430 | 1,867,570 | 1,855,000 | 1,805,980 | 1,392,420 |
| Return on total capital | 9.90% | 9.01% | 9.14% | 7.24% | 8.90% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $229,263K ÷ ($—K + $2,315,430K)
= 9.90%
Ormat Technologies Inc's return on total capital has exhibited a declining trend over the past five years. The company's return on total capital decreased from 7.40% in 2019 to 3.87% in 2023. This downward trend may indicate challenges in generating profits from the total capital employed by the company.
A low return on total capital can suggest inefficiency in utilizing the company's resources to generate profits. It could also raise concerns about the company's ability to generate adequate returns for its investors and stakeholders.
It could be beneficial for Ormat Technologies Inc to assess and improve the efficiency of its capital utilization strategies to enhance its return on total capital in the future. Additionally, the company may need to explore opportunities to enhance profitability and optimize its capital allocation decisions to improve its financial performance.
Peer comparison
Dec 31, 2023