Stepan Company (SCL)
Return on equity (ROE)
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Net income | US$ in thousands | 50,370 | 40,204 | 147,153 | 137,804 | 126,770 |
| Total stockholders’ equity | US$ in thousands | 1,169,930 | 1,216,490 | 1,166,060 | 1,074,190 | 986,693 |
| ROE | 4.31% | 3.30% | 12.62% | 12.83% | 12.85% |
December 31, 2024 calculation
ROE = Net income ÷ Total stockholders’ equity
= $50,370K ÷ $1,169,930K
= 4.31%
Stepan Company's return on equity (ROE) has exhibited a relatively stable trend from December 31, 2020 to December 31, 2022, hovering around the range of 12.85% to 12.62%. This indicates that the company has been effectively utilizing its shareholders' equity to generate profits during this period.
However, there is a noticeable decline in the ROE in the subsequent years, dropping to 3.30% by December 31, 2023 and further decreasing to 4.31% by December 31, 2024. This significant decrease may raise concerns about the company's ability to efficiently generate profits relative to the equity invested by shareholders.
It is essential for Stepan Company to assess the factors contributing to this decline in ROE and take corrective actions to enhance profitability and improve the return on equity. By analyzing the components affecting ROE, such as profit margins, asset turnover, and financial leverage, the company can identify areas for improvement and strive to enhance shareholder value in the long term.
Peer comparison
Dec 31, 2024