Wingstop Inc (WING)

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	165,616	112,594	91,933	73,756	57,390
Long-term debt	US$ in thousands	1,206,200	712,327	706,846	469,394	466,933
Total stockholders’ equity	US$ in thousands	-675,586	-457,366	-390,861	-309,525	-341,310
Return on total capital		31.21%	44.16%	29.09%	46.14%	45.68%

December 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $165,616K ÷ ($1,206,200K + $-675,586K)
= 31.21%

To analyze Wingstop Inc's return on total capital over the five-year period from 2020 to 2024, we observe fluctuations in the ratio as follows:

- In 2020, Wingstop Inc achieved a return on total capital of 45.68%, indicating that the company generated $45.68 in profit for every $100 of total capital invested.

- The ratio increased to 46.14% in 2021, implying continued efficiency in generating returns from the capital employed.

- However, there was a noticeable decline in 2022, with the return on total capital falling to 29.09%. This decrease may suggest a decrease in profitability or a significant increase in the amount of capital employed.

- The ratio rebounded in 2023 to 44.16%, indicating a recovery in the company's ability to generate returns from its total capital.

- In 2024, the return on total capital decreased again to 31.21%, signaling potential challenges in maintaining profitability relative to the amount of capital invested.

Overall, the trend in Wingstop Inc's return on total capital shows some variability, with fluctuations that may reflect changes in the company's operational efficiency, profitability, or capital structure over the five-year period. It is important for investors and stakeholders to further investigate the underlying factors driving these fluctuations to assess the company's financial performance and sustainability.