Stepan Company (SCL)
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 | 79,904 | 64,337 | 209,312 | 174,436 | 153,860 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 1,169,930 | 1,216,490 | 1,166,060 | 1,074,190 | 986,693 |
| Return on total capital | 6.83% | 5.29% | 17.95% | 16.24% | 15.59% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $79,904K ÷ ($—K + $1,169,930K)
= 6.83%
Based on the data provided, Stepan Company's return on total capital has shown fluctuations over the years. The return on total capital was 15.59% as of December 31, 2020, which improved to 16.24% by December 31, 2021. The company experienced a significant increase in return on total capital to 17.95% by December 31, 2022.
However, there was a notable decline in the return on total capital to 5.29% by December 31, 2023, followed by a slight improvement to 6.83% by December 31, 2024. This decline in the return on total capital in 2023 might indicate potential challenges or inefficiencies that impacted the company's ability to generate returns on its total capital effectively.
Overall, it is essential for Stepan Company to closely monitor its return on total capital to ensure sustained profitability and efficiency in utilizing its capital resources to create value for its stakeholders. Analyzing the factors driving fluctuations in this ratio can help the company make informed strategic decisions to enhance its financial performance and long-term sustainability.
Peer comparison
Dec 31, 2024