Sonic Automotive Inc (SAH)
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 | 461,500 | 423,600 | 314,000 | 538,400 | 33,900 |
| Long-term debt | US$ in thousands | 1,511,900 | 1,616,500 | 1,672,200 | 1,510,700 | 651,800 |
| Total stockholders’ equity | US$ in thousands | 1,062,300 | 891,900 | 895,200 | 1,076,400 | 814,800 |
| Return on total capital | 17.93% | 16.89% | 12.23% | 20.81% | 2.31% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $461,500K ÷ ($1,511,900K + $1,062,300K)
= 17.93%
Sonic Automotive Inc's return on total capital has shown significant fluctuations over the past five years. The company's return on total capital was 2.31% as of December 31, 2020, indicating relatively low efficiency in generating returns from its total capital employed. However, there was a notable improvement in performance by the end of 2021, with the return on total capital surging to 20.81%, suggesting a significant increase in the company's profitability and capital utilization.
In the following years, Sonic Automotive Inc's return on total capital remained above the initial level but experienced some fluctuations. By the end of 2022, the return on total capital dropped to 12.23%, reflecting a decrease in profitability relative to the previous year. However, there was a recovery in performance in 2023 and 2024, with the return on total capital reaching 16.89% and 17.93%, respectively, indicating improvements in the company's ability to generate returns from its total capital.
Overall, Sonic Automotive Inc's return on total capital has shown variability, with periods of both strong performance and slight downturns. It is important for the company to monitor and manage its capital allocation and operational efficiency to sustain and improve its return on total capital in the future.
Peer comparison
Dec 31, 2024