Southern Company (SO)
Return on total capital
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 5,825,000 | 4,756,000 | 4,839,000 | 5,204,000 | 5,370,000 | 4,901,000 | 4,431,000 | 3,484,000 | 3,698,000 | 4,758,000 | 4,870,000 | 5,220,000 | 4,885,000 | 4,846,000 | 5,024,000 | 5,308,000 | 7,736,000 | 7,624,000 | 7,785,000 | 6,506,000 |
| Long-term debt | US$ in thousands | 59,400,000 | — | — | — | 54,600,000 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 31,444,000 | 35,304,000 | 34,648,000 | 34,562,000 | 30,408,000 | 35,718,000 | 33,255,000 | 32,920,000 | 27,874,000 | 33,510,000 | 33,037,000 | 33,359,000 | 27,972,000 | 32,791,000 | 32,252,000 | 32,207,000 | 27,505,000 | 32,082,000 | 31,422,000 | 30,978,000 |
| Return on total capital | 6.41% | 13.47% | 13.97% | 15.06% | 6.32% | 13.72% | 13.32% | 10.58% | 13.27% | 14.20% | 14.74% | 15.65% | 17.46% | 14.78% | 15.58% | 16.48% | 28.13% | 23.76% | 24.78% | 21.00% |
December 31, 2023 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $5,825,000K ÷ ($59,400,000K + $31,444,000K)
= 6.41%
Southern Company's return on total capital has shown fluctuating trends over the past eight quarters. The return on total capital ranged from a low of 5.79% in Q2 2023 to a high of 6.83% in Q3 2022. Overall, the return on total capital has been relatively stable, with an average of 6.43% over the period.
The return on total capital indicates the efficiency and effectiveness of the company in generating returns from its total invested capital, including both debt and equity. A higher return on total capital suggests that the company is effectively utilizing its capital to generate profits for shareholders.
It is worth noting that the return on total capital has experienced a slight downward trend in the recent quarters, from 6.83% in Q3 2022 to 6.32% in Q4 2023. This trend may indicate potential challenges in maintaining or improving profitability levels relative to the total capital employed by the company.
In evaluating Southern Company's performance, stakeholders should closely monitor the factors influencing the return on total capital to ensure sustainable profitability and efficient capital allocation strategies.
Peer comparison
Dec 31, 2023