Sonoco Products Company (SON)
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 | 411,727 | 589,823 | 648,677 | 658,463 | 698,176 | 701,061 | 692,849 | 703,634 | 687,042 | 647,555 | 592,235 | -41,533 | -74,749 | -65,919 | -68,573 | 487,979 | 493,153 | 493,270 | 511,098 | 529,633 |
| Long-term debt | US$ in thousands | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 2,286,210 | 2,478,940 | 2,434,640 | 2,427,480 | 2,431,840 | 2,339,160 | 2,299,320 | 2,205,560 | 2,072,800 | 1,935,080 | 1,929,680 | 1,918,930 | 1,849,540 | 1,860,730 | 1,822,430 | 1,912,800 | 1,910,530 | 1,881,330 | 1,807,700 | 1,755,440 |
| Return on total capital | 18.01% | 23.79% | 26.64% | 27.13% | 28.71% | 29.97% | 30.13% | 31.90% | 33.15% | 33.46% | 30.69% | -2.16% | -4.04% | -3.54% | -3.76% | 25.51% | 25.81% | 26.22% | 28.27% | 30.17% |
December 31, 2024 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $411,727K ÷ ($—K + $2,286,210K)
= 18.01%
Sonoco Products Company's return on total capital has shown fluctuations over the given period. The ratio stood at around 30% in the first quarter of 2020, gradually declining to 25.81% by the end of the year. However, there was a significant negative turn in the performance in the second quarter of 2021, with a low of -3.76%. This negative trend continued into the following quarters of 2021.
The company managed to reverse this downward trend starting from the second quarter of 2022, showing impressive gains in return on total capital. By the end of 2022, the ratio had climbed back to the 30% range, reaching a peak of 33.46% in the third quarter of that year. Nevertheless, the ratio moderated slightly in the subsequent quarters of 2023 and 2024, settling in the 20-30% range.
The decreasing trend observed in the last two quarters of 2024, with the return on total capital dropping to 18.01%, might warrant further investigation into the company's capital efficiency and profitability during that period. It is crucial for Sonoco Products Company to closely monitor and manage its return on total capital to ensure sustained financial performance and value creation for its stakeholders.
Peer comparison
Dec 31, 2024