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Here's What's Concerning About Huntsman's (NYSE:HUN) Returns On Capital

Simply Wall St · 4d ago

Ignoring the stock price of a company, what are the underlying trends that tell us a business is past the growth phase? A business that's potentially in decline often shows two trends, a return on capital employed (ROCE) that's declining, and a base of capital employed that's also declining. Trends like this ultimately mean the business is reducing its investments and also earning less on what it has invested. So after we looked into Huntsman (NYSE:HUN), the trends above didn't look too great.

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Return On Capital Employed (ROCE): What Is It?

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. Analysts use this formula to calculate it for Huntsman:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)

0.0064 = US$35m ÷ (US$7.1b - US$1.6b) (Based on the trailing twelve months to September 2025).

So, Huntsman has an ROCE of 0.6%. Ultimately, that's a low return and it under-performs the Chemicals industry average of 9.3%.

See our latest analysis for Huntsman

roce
NYSE:HUN Return on Capital Employed January 6th 2026

In the above chart we have measured Huntsman's prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for Huntsman .

What The Trend Of ROCE Can Tell Us

We are a bit worried about the trend of returns on capital at Huntsman. To be more specific, the ROCE was 2.2% five years ago, but since then it has dropped noticeably. And on the capital employed front, the business is utilizing roughly the same amount of capital as it was back then. This combination can be indicative of a mature business that still has areas to deploy capital, but the returns received aren't as high due potentially to new competition or smaller margins. If these trends continue, we wouldn't expect Huntsman to turn into a multi-bagger.

The Key Takeaway

In summary, it's unfortunate that Huntsman is generating lower returns from the same amount of capital. It should come as no surprise then that the stock has fallen 56% over the last five years, so it looks like investors are recognizing these changes. That being the case, unless the underlying trends revert to a more positive trajectory, we'd consider looking elsewhere.

On a final note, we found 2 warning signs for Huntsman (1 is potentially serious) you should be aware of.

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