Stepan Company (SCL)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 12.04% | 15.48% | 16.92% | 20.59% | 18.39% |
| Operating profit margin | 2.54% | 7.51% | 7.30% | 9.20% | 6.89% |
| Pretax margin | 2.10% | 6.84% | 7.37% | 9.13% | 6.82% |
| Net profit margin | 1.74% | 5.33% | 5.89% | 6.80% | 5.58% |
Stepan Co. has shown a declining trend in profitability ratios over the past five years. The gross profit margin, which indicates the percentage of revenue left after subtracting the cost of goods sold, has decreased from 18.28% in 2019 to 11.94% in 2023. This suggests that the company's ability to generate profits from its core operations has deteriorated over time.
Similarly, the operating profit margin, which measures operating efficiency by comparing operating income to revenue, has also shown a decreasing trend, dropping from 7.81% in 2019 to 3.31% in 2023. This indicates that the company's ability to control operating expenses and generate profits has weakened.
The pretax margin, which reflects the company's profitability before taxes, has followed a similar downward trajectory, declining from 6.77% in 2019 to 2.08% in 2023. This implies that Stepan Co. has been less successful in generating profits before accounting for taxes in recent years.
Finally, the net profit margin, which reveals the proportion of revenue that translates into net income, has also decreased from 5.55% in 2019 to 1.73% in 2023. This indicates a reduction in the company's ability to convert revenue into profit after accounting for all expenses and taxes.
In conclusion, the profitability ratios of Stepan Co. have exhibited a consistent downward trend over the past five years, signaling a decline in the company's overall profitability and efficiency in generating profits from its operations.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 2.48% | 8.52% | 8.27% | 9.79% | 8.06% |
| Return on assets (ROA) | 1.70% | 6.05% | 6.67% | 7.23% | 6.53% |
| Return on total capital | 3.62% | 12.79% | 12.22% | 14.95% | 11.67% |
| Return on equity (ROE) | 3.30% | 12.62% | 12.83% | 12.85% | 11.56% |
Based on the provided data, Stepan Co.'s profitability ratios have shown variability over the past five years.
1. Operating return on assets (Operating ROA) has fluctuated, decreasing from 10.43% in 2020 to 3.26% in 2023. This indicates that the company's profitability from core operations in generating profit from its assets has declined in recent years.
2. Return on assets (ROA) has also followed a similar trend, declining from 7.23% in 2020 to 1.70% in 2023. This suggests that the overall profitability of the company in generating earnings from its total assets has decreased.
3. Return on total capital has shown a decreasing trend, falling from 15.41% in 2020 to 4.12% in 2023. This indicates a reduction in the company's efficiency in generating returns from its total capital employed.
4. Return on equity (ROE) has also displayed variability, with fluctuations from 11.56% in 2019 to 3.30% in 2023. This shows that the company's ability to generate returns for its shareholders has been inconsistent over the years.
Overall, the profitability ratios suggest that Stepan Co. has experienced challenges in maintaining and enhancing its profitability levels in recent years. Management may need to focus on improving operational efficiency, asset utilization, and capital allocation strategies to enhance profitability and create sustainable value for the company and its stakeholders.