Stepan Company (SCL)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 12.49% | 11.94% | 15.40% | 16.87% | 20.52% |
| Operating profit margin | 3.23% | 2.52% | 3.79% | 3.69% | 4.93% |
| Pretax margin | 2.77% | 2.08% | 6.80% | 7.35% | 9.15% |
| Net profit margin | 2.31% | 1.73% | 5.31% | 5.87% | 6.78% |
Stepan Company's profitability ratios have shown a declining trend over the years.
- The Gross Profit Margin, which indicates the percentage of revenue that exceeds the cost of goods sold, decreased from 20.52% in 2020 to 12.49% in 2024, indicating a decrease in profitability at the gross level.
- The Operating Profit Margin, which reflects the company's ability to generate profits from its core operations, decreased from 4.93% in 2020 to 3.23% in 2024, indicating declining efficiency in generating profits from operations.
- The Pretax Margin, which shows the percentage of each dollar of revenue that results in pre-tax profit, declined from 9.15% in 2020 to 2.77% in 2024, indicating challenges in controlling operating expenses and other costs.
- The Net Profit Margin, representing the profit left after covering all expenses, dropped from 6.78% in 2020 to 2.31% in 2024, indicating decreasing bottom-line profitability.
Overall, the decreasing trend in these profitability ratios suggests that Stepan Company has been facing challenges in maintaining and improving its profitability over the years, possibly due to factors such as increasing costs, pricing pressures, or inefficiencies in operations.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 3.06% | 2.48% | 4.32% | 4.19% | 5.26% |
| Return on assets (ROA) | 2.19% | 1.70% | 6.05% | 6.67% | 7.23% |
| Return on total capital | 6.83% | 5.29% | 17.95% | 16.24% | 15.59% |
| Return on equity (ROE) | 4.31% | 3.30% | 12.62% | 12.83% | 12.85% |
Stepping through the historical profitability ratios of Stepan Company, we observe the following trends:
1. Operating Return on Assets (Operating ROA):
- Steadily decreased from 5.26% on December 31, 2020, to 4.19% on December 31, 2021, before slightly increasing to 4.32% on December 31, 2022.
- Experienced a significant decline to 2.48% on December 31, 2023, followed by a moderate recovery to 3.06% on December 31, 2024.
2. Return on Assets (ROA):
- Started at 7.23% on December 31, 2020, and showed a downward trend over the years.
- Declined to 6.67% on December 31, 2021, 6.05% on December 31, 2022, 1.70% on December 31, 2023, and 2.19% on December 31, 2024.
3. Return on Total Capital:
- Varied between 15.59% and 17.95% from December 31, 2020, to December 31, 2022, indicating a strong performance.
- However, there was a notable drop in return on total capital to 5.29% on December 31, 2023, followed by a slight improvement to 6.83% on December 31, 2024.
4. Return on Equity (ROE):
- The return on equity ranged from 12.85% to 12.83% from December 31, 2020, to December 31, 2021, demonstrating stability.
- Witnessed a significant decline to 3.30% on December 31, 2023, before a slight increase to 4.31% on December 31, 2024.
Overall, while Return on Assets and Return on Equity experienced declines, Operating Return on Assets remained relatively stable, and Return on Total Capital showed resilience despite some fluctuations. Stepan Company may need to focus on improving its profitability metrics to enhance shareholder value and operational efficiency.