Semtech Corporation (SMTC)
Return on total capital
| Jan 28, 2024 | Jan 29, 2023 | Jan 30, 2022 | Jan 31, 2021 | Jan 26, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | -945,698 | 96,370 | 146,294 | 68,676 | 52,009 |
| Long-term debt | US$ in thousands | 1,371,040 | 1,296,970 | 171,676 | 179,195 | 194,743 |
| Total stockholders’ equity | US$ in thousands | -307,434 | 755,852 | 737,584 | 698,743 | 676,954 |
| Return on total capital | -88.91% | 4.69% | 16.09% | 7.82% | 5.97% |
January 28, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $-945,698K ÷ ($1,371,040K + $-307,434K)
= -88.91%
Semtech Corporation's return on total capital has been fluctuating over the past five years. In the most recent fiscal year as of January 28, 2024, the return on total capital was -88.91%, indicating that the company had a negative return on the total capital employed. This sharp decline from the previous year's figure of 4.69% raises concerns regarding the company's capital allocation efficiency and profitability.
In comparison, the return on total capital was notably higher in the fiscal years ending January 30, 2022, and January 31, 2021, at 16.09% and 7.82% respectively. These figures suggest that the company was more effective in generating returns relative to the capital invested in those particular years.
However, it is worth noting that the return on total capital has been below 10% in the past three fiscal years, indicating that Semtech Corporation may be facing challenges in maximizing returns on the capital employed. This trend warrants further investigation into the company's operational efficiency, capital structure, and overall financial performance to identify underlying issues and opportunities for improvement.
Peer comparison
Jan 28, 2024