Yes, if the trend continues, it does look as though superior returns on capital are in the wind. The question for me is, are we seeing a structural change, or are we seeing cycles at play? The business has been around for a long time. Is something changing permanently, or cyclically? Is this a "turn around" story, or a business that is improving through evolution.
If superior returns on capital are the new normal, is it thanks to improving product (mainly thanks to R&D effort starting to pay off), or is it thanks to economies of scale (though I acknowledge that there may be a scale factor at play wrt R&D expense shrinking relative to sales, as pointed out by @madamswer), or is it thanks to other operational improvements such as distribution, marketing etc.
Or to cut to the chase, what can SDI do that its competitors cannot easily replicate?
SDI Price at posting:
90.5¢ Sentiment: None Disclosure: Not Held
(20min delay)
