Scotts Miracle-Gro Company (SMG)
Return on total capital
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | -275,200 | -440,000 | 751,200 | 590,700 | 707,400 |
| Long-term debt | US$ in thousands | 2,557,400 | 2,826,200 | 2,236,700 | 1,455,100 | 1,523,500 |
| Total stockholders’ equity | US$ in thousands | -267,300 | 147,700 | 1,013,300 | 697,200 | 718,700 |
| Return on total capital | -12.02% | -14.80% | 23.11% | 27.45% | 31.55% |
September 30, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $-275,200K ÷ ($2,557,400K + $-267,300K)
= -12.02%
Scotts Miracle-Gro Company's return on total capital has exhibited variability over the past five years. The return on total capital decreased from 18.04% in 2019 to 13.06% in 2022, indicating a decline in the company's efficiency in generating profits from its total invested capital. However, in 2021, there was a significant improvement, with the return on total capital reaching 23.12%, showcasing a positive trend in capital utilization efficiency.
In the most recent year, ending on September 30, 2023, the return on total capital further decreased to 8.14%, signifying a potential decline in the company's ability to generate returns from its total capital compared to the prior year.
The decreasing trend in the return on total capital over the last two years may warrant further examination to identify the factors contributing to this decline. These factors could include changes in the company's capital structure, investments, or operating efficiency.
Overall, the fluctuation in Scotts Miracle-Gro Company's return on total capital underscores the importance of closely monitoring the company's capital efficiency and its impact on profitability, investment decision-making, and long-term financial performance.
Peer comparison
Sep 30, 2023