Steel Dynamics Inc (STLD)
Return on total capital
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 2,039,230 | 3,151,180 | 5,112,610 | 4,266,280 | 866,551 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 8,934,290 | 8,866,670 | 8,130,360 | 6,304,640 | 4,345,160 |
| Return on total capital | 22.82% | 35.54% | 62.88% | 67.67% | 19.94% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $2,039,230K ÷ ($—K + $8,934,290K)
= 22.82%
Steel Dynamics Inc's return on total capital has shown significant fluctuations over the past five years. Starting at 19.94% in December 2020, the return increased substantially to 67.67% by December 2021. This notable rise suggests a significant improvement in the company's ability to generate profits relative to its total capital invested.
However, the return on total capital decreased to 62.88% by December 2022, indicating a slight decline from the previous year. Despite this slight drop, the return remained at a relatively high level, demonstrating the company's efficient utilization of its total capital for generating returns.
In December 2023, there was a further decrease in the return on total capital to 35.54%, showing a significant dip compared to the previous year. This decline may raise concerns about the company's capital allocation efficiency and profitability.
Finally, by December 2024, the return on total capital improved slightly to 22.82%, although it remained lower than the levels seen in the earlier years. This improvement suggests some efforts to enhance capital performance but indicates that Steel Dynamics Inc may still face challenges in maximizing returns on its total capital.
Overall, while Steel Dynamics Inc has experienced fluctuations in its return on total capital over the years, it is essential for the company to focus on maintaining and improving its capital utilization efficiency to drive sustainable profitability in the future.
Peer comparison
Dec 31, 2024