Select Medical Holdings (SEM)
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 | 303,374 | 580,995 | 379,483 | 570,074 | 477,645 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 1,681,360 | 1,288,300 | 1,317,530 | 1,325,900 | 1,060,480 |
| Return on total capital | 18.04% | 45.10% | 28.80% | 43.00% | 45.04% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $303,374K ÷ ($—K + $1,681,360K)
= 18.04%
Return on total capital is a key financial performance metric that indicates how efficiently a company is generating profits from its total capital employed. Analyzing the data provided for Select Medical Holdings, the return on total capital has exhibited fluctuations over the years.
As of December 31, 2020, the return on total capital stood at 45.04%, indicating that the company was effectively utilizing its capital to generate profits. However, by the end of December 31, 2021, the return on total capital slightly decreased to 43.00%, albeit remaining at a relatively high level.
The financial performance of Select Medical Holdings took a downturn by December 31, 2022, as the return on total capital dropped to 28.80%. This decrease suggests that the company may not have been as efficient in generating returns from its total capital during that period.
The following year, by December 31, 2023, the return on total capital improved significantly to 45.10%, surpassing the level observed at the end of 2020. This uptick indicates a potential recovery in the company's capital efficiency and profitability.
However, the trend reversed by December 31, 2024, when the return on total capital declined notably to 18.04%. This sharp drop suggests a decrease in the company's ability to generate returns from its total capital, potentially signaling challenges in its operational performance or capital allocation strategies.
In summary, the return on total capital for Select Medical Holdings has shown variability over the analyzed period, with both peaks and troughs. It is essential for the company to closely monitor and address the factors influencing this metric to ensure sustainable profitability and efficient capital utilization in the future.
Peer comparison
Dec 31, 2024