Standard Motor Products Inc (SMP)

Return on equity (ROE)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income	US$ in thousands	34,148	55,351	90,886	57,393	57,917
Total stockholders’ equity	US$ in thousands	635,064	610,020	601,580	550,236	504,228
ROE		5.38%	9.07%	15.11%	10.43%	11.49%

December 31, 2023 calculation

ROE = Net income ÷ Total stockholders’ equity
= $34,148K ÷ $635,064K
= 5.38%

Standard Motor Products, Inc.'s return on equity (ROE) has exhibited a fluctuating trend over the past five years. In 2023, the ROE decreased to 5.38%, marking a decrease from the previous year. This decline suggests a lower profitability generated from the shareholders' equity investment in the company. Compared to 2021 when the ROE was at 15.11%, the 2023 figure indicates a significant decrease in the company's ability to generate profits from the equity portion of its capital structure.

The ROE of 5.38% in 2023 also falls below the industry average, indicating that Standard Motor Products, Inc. may be less efficient in utilizing its equity to generate profits compared to its industry peers.

Overall, the decreasing trend in the ROE over the past two years raises concerns about the company's profitability and efficiency in generating returns for its shareholders. Further analysis of the company's financial performance and operational activities may be necessary to identify the factors contributing to the declining ROE and to strategize for improvement.