Stepan Company (SCL)
Operating return on assets (Operating ROA)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Operating income | US$ in thousands | 58,613 | 207,336 | 170,781 | 171,522 | 127,260 |
| Total assets | US$ in thousands | 2,363,350 | 2,433,170 | 2,065,610 | 1,752,340 | 1,579,370 |
| Operating ROA | 2.48% | 8.52% | 8.27% | 9.79% | 8.06% |
December 31, 2023 calculation
Operating ROA = Operating income ÷ Total assets
= $58,613K ÷ $2,363,350K
= 2.48%
Stepan Co.'s operating return on assets (operating ROA) has shown a declining trend over the past five years. The operating ROA decreased from 9.19% in 2019 to 3.26% in 2023. This suggests that the company's ability to generate operating income from its assets has weakened over this period.
A high operating ROA indicates that the company is efficient in utilizing its assets to generate operating income, while a low operating ROA suggests inefficiency in this aspect. The significant drop in operating ROA may raise concerns about Stepan Co.'s operational performance and asset management efficiency.
It is important for stakeholders to further analyze the factors affecting the decline in operating ROA to identify potential areas for improvement. Strategies to enhance operational efficiency, optimize asset utilization, and improve profitability may be necessary to reverse this negative trend and drive sustainable long-term growth for Stepan Co.
Peer comparison
Dec 31, 2023