SM Energy Co (SM)
Return on total capital
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 1,109,853 | 1,132,045 | 979,310 | 921,399 | 991,376 | 1,027,433 | 1,317,703 | 1,616,769 | 1,859,785 | 1,988,228 | 1,628,618 | 936,580 | 205,755 | -280,845 | -478,044 | -387,344 | -612,343 | -579,791 | -409,920 | -213,394 |
| Long-term debt | US$ in thousands | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 4,237,260 | 4,061,550 | 3,843,940 | 3,698,250 | 3,615,850 | 3,404,290 | 3,298,470 | 3,229,800 | 3,085,460 | 2,867,660 | 2,444,900 | 2,115,110 | 2,063,130 | 1,636,900 | 1,552,510 | 1,769,670 | 2,016,160 | 2,185,110 | 2,280,830 | 2,341,720 |
| Return on total capital | 26.19% | 27.87% | 25.48% | 24.91% | 27.42% | 30.18% | 39.95% | 50.06% | 60.28% | 69.33% | 66.61% | 44.28% | 9.97% | -17.16% | -30.79% | -21.89% | -30.37% | -26.53% | -17.97% | -9.11% |
December 31, 2024 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $1,109,853K ÷ ($—K + $4,237,260K)
= 26.19%
The return on total capital for SM Energy Co has shown a significant improvement over the past few years based on the provided data. The ratio was negative and deteriorating in the earlier periods, reaching its lowest point of -30.37% at the end of December 2020. However, starting from March 2021, the return on total capital began to trend upwards, showing a positive turnaround in the company's performance.
The return on total capital reached 9.97% by the end of December 2021, which indicated a notable improvement in the company's ability to generate returns from its total capital employed. Subsequently, the ratio continued to increase steadily, reaching a peak of 69.33% by the end of September 2022. This surge in the return on total capital reflected the company's efficient utilization of both debt and equity to generate profits.
Although there was a slight drop in the ratio in the following periods, with the return on total capital hovering around 27-30% from March 2023 to September 2024, it still remained at a relatively strong level, indicating the company's sustained ability to generate favorable returns compared to the total capital invested.
Overall, the positive trend in SM Energy Co's return on total capital over the years signifies an improvement in the company's profitability and efficiency in generating returns for its investors and creditors.
Peer comparison
Dec 31, 2024