Penguin Solutions, Inc. (PENG)

Return on total capital

		Aug 31, 2024	Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	-2,789	-3,092	66,826	-15,124	24,360
Long-term debt	US$ in thousands	—	—	—	—	—
Total stockholders’ equity	US$ in thousands	391,381	222,475	371,611	310,251	282,104
Return on total capital		-0.71%	-1.39%	17.98%	-4.87%	8.64%

August 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $-2,789K ÷ ($—K + $391,381K)
= -0.71%

The analysis of Penguin Solutions, Inc.'s return on total capital over the specified periods reveals considerable fluctuations. As of August 31, 2020, the company exhibited a positive return of 8.64%, indicating effective utilization of total capital to generate earnings. However, this performance declined sharply in the subsequent year, with the return turning negative at -4.87% as of August 31, 2021, reflecting potential challenges or increased costs impacting profitability.

The following year, August 31, 2022, demonstrated a significant recovery, with the return escalating to 17.98%. This suggests that Penguin Solutions, Inc. was able to leverage its total capital efficiently again, possibly due to improved operational performance, revenue growth, or cost management strategies. Nonetheless, this upward trend was not sustained, as evidenced by the subsequent decline to -1.39% on August 31, 2023, indicating a reversal in financial performance or increased burdens on capital productivity.

Most recently, as of August 31, 2024, the return slightly improved to -0.71%, but remained in negative territory. This persistent negative trend implies ongoing difficulties in generating positive returns on total capital. Overall, the company has experienced volatility in its ability to generate returns from its capital base over these years, with periods of notable recovery interspersed with declines that suggest potential issues affecting its efficiency and profitability.