Stock Analysis on Net

Applied Materials Inc. (NASDAQ:AMAT)

Return on Capital (ROC)

Microsoft Excel LibreOffice Calc

Return on Invested Capital (ROIC)

Applied Materials Inc., ROIC calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Oct 31, 2021 Oct 25, 2020 Oct 27, 2019 Oct 28, 2018 Oct 29, 2017 Oct 30, 2016
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 6,195  3,885  2,934  3,704  3,582  1,825 
Invested capital2 14,717  13,090  10,129  10,187  11,191  9,281 
Performance Ratio
ROIC3 42.10% 29.68% 28.97% 36.36% 32.01% 19.67%
Benchmarks
ROIC, Competitors4
Advanced Micro Devices Inc. 30.67% 11.73% 13.53% 2.05% -14.86%
Broadcom Inc. 11.02% 4.80% 5.00% 10.03% 3.52% -1.55%
Intel Corp. 27.99% 26.74% 23.84% 10.03% 16.51%
Lam Research Corp. 41.94% 24.20% 20.10% 25.72% 31.56% 10.67%
Micron Technology Inc. 12.88% 6.84% 17.15% 39.70% 18.99% -0.03%
NVIDIA Corp. 33.44% 19.63% 79.86% 41.40% 40.74% 31.19%
Qualcomm Inc. 42.56% 27.48% 28.27% -16.74% 1.92% 27.12%
Texas Instruments Inc. 43.48% 43.15% 44.66% 32.30% 28.86%

Based on: 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28), 10-K (reporting date: 2017-10-29), 10-K (reporting date: 2016-10-30).

1 NOPAT. See details »

2 Invested capital. See details »

3 2021 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 6,195 ÷ 14,717 = 42.10%

4 Click competitor name to see calculations.

Performance ratio Description The company
ROIC A measure of the periodic, after tax, cash-on-cash yield earned in the business. Applied Materials Inc. ROIC improved from 2019 to 2020 and from 2020 to 2021.

Decomposition of ROIC

Applied Materials Inc., decomposition of ROIC

Microsoft Excel LibreOffice Calc
ROIC = OPM1 × TO2 × 1 – CTR3
Oct 31, 2021 42.10% = 30.65% × 1.57 × 87.64%
Oct 25, 2020 29.68% = 25.67% × 1.31 × 87.99%
Oct 27, 2019 28.97% = 23.94% × 1.44 × 83.90%
Oct 28, 2018 36.36% = 28.65% × 1.69 × 74.93%
Oct 29, 2017 32.01% = 27.25% × 1.30 × 90.42%
Oct 30, 2016 19.67% = 20.26% × 1.17 × 83.22%

Based on: 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28), 10-K (reporting date: 2017-10-29), 10-K (reporting date: 2016-10-30).

1 Operating profit margin (OPM). See calculations »

2 Turnover of capital (TO). See calculations »

3 Effective cash tax rate (CTR). See calculations »

The primary reason for the increase in return on invested capital (ROIC) over 2021 year is the increase in profitability measured by operating profit margin (OPM) ratio.


Operating Profit Margin (OPM)

Applied Materials Inc., OPM calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Oct 31, 2021 Oct 25, 2020 Oct 27, 2019 Oct 28, 2018 Oct 29, 2017 Oct 30, 2016
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 6,195  3,885  2,934  3,704  3,582  1,825 
Add: Cash operating taxes2 874  530  563  1,239  380  368 
Net operating profit before taxes (NOPBT) 7,069  4,416  3,497  4,943  3,962  2,194 
 
Net sales 23,063  17,202  14,608  17,253  14,537  10,825 
Profitability Ratio
OPM3 30.65% 25.67% 23.94% 28.65% 27.25% 20.26%
Benchmarks
OPM, Competitors4
Advanced Micro Devices Inc. 13.98% 6.80% 5.88% 2.42% -5.94%
Broadcom Inc. 31.06% 17.10% 15.65% 24.22% 12.14% -2.93%
Intel Corp. 32.65% 33.40% 30.95% 26.66% 21.44%
Lam Research Corp. 34.25% 27.26% 20.46% 29.43% 27.76% 18.88%
Micron Technology Inc. 23.15% 14.37% 29.89% 47.86% 28.39% 1.37%
NVIDIA Corp. 28.45% 26.65% 33.09% 32.77% 24.50% 14.96%
Qualcomm Inc. 30.10% 24.17% 29.86% 1.24% 9.45% 26.09%
Texas Instruments Inc. 43.13% 40.81% 43.25% 41.06% 37.64%

Based on: 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28), 10-K (reporting date: 2017-10-29), 10-K (reporting date: 2016-10-30).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2021 Calculation
OPM = 100 × NOPBT ÷ Net sales
= 100 × 7,069 ÷ 23,063 = 30.65%

4 Click competitor name to see calculations.

Profitability ratio Description The company
OPM The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. Applied Materials Inc. OPM improved from 2019 to 2020 and from 2020 to 2021.

Turnover of Capital (TO)

Applied Materials Inc., TO calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Oct 31, 2021 Oct 25, 2020 Oct 27, 2019 Oct 28, 2018 Oct 29, 2017 Oct 30, 2016
Selected Financial Data (US$ in millions)
Net sales 23,063  17,202  14,608  17,253  14,537  10,825 
Invested capital1 14,717  13,090  10,129  10,187  11,191  9,281 
Efficiency Ratio
TO2 1.57 1.31 1.44 1.69 1.30 1.17
Benchmarks
TO, Competitors3
Advanced Micro Devices Inc. 2.23 1.97 2.43 2.39 1.90
Broadcom Inc. 0.42 0.36 0.38 0.47 0.35 0.29
Intel Corp. 0.95 0.89 0.94 0.94 0.92
Lam Research Corp. 1.40 1.02 1.15 1.15 1.15 0.64
Micron Technology Inc. 0.60 0.51 0.60 0.86 0.71 0.56
NVIDIA Corp. 1.28 0.77 2.45 1.50 1.71 2.08
Qualcomm Inc. 1.66 1.33 1.13 1.21 0.45 1.30
Texas Instruments Inc. 1.12 1.19 1.26 1.26 1.11

Based on: 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28), 10-K (reporting date: 2017-10-29), 10-K (reporting date: 2016-10-30).

1 Invested capital. See details »

2 2021 Calculation
TO = Net sales ÷ Invested capital
= 23,063 ÷ 14,717 = 1.57

3 Click competitor name to see calculations.

Efficiency ratio Description The company
TO The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. Applied Materials Inc. TO deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.

Effective Cash Tax Rate (CTR)

Applied Materials Inc., CTR calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Oct 31, 2021 Oct 25, 2020 Oct 27, 2019 Oct 28, 2018 Oct 29, 2017 Oct 30, 2016
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 6,195  3,885  2,934  3,704  3,582  1,825 
Add: Cash operating taxes2 874  530  563  1,239  380  368 
Net operating profit before taxes (NOPBT) 7,069  4,416  3,497  4,943  3,962  2,194 
Tax Rate
CTR3 12.36% 12.01% 16.10% 25.07% 9.58% 16.78%
Benchmarks
CTR, Competitors4
Advanced Micro Devices Inc. 1.75% 12.55% 5.44% 64.46%
Broadcom Inc. 16.44% 22.63% 15.10% 11.38% 16.03%
Intel Corp. 9.76% 10.33% 18.16% 59.84% 16.68%
Lam Research Corp. 12.57% 13.09% 14.26% 24.00% 1.52% 11.77%
Micron Technology Inc. 6.96% 6.13% 4.94% 3.36% 6.08% 104.15%
NVIDIA Corp. 8.10% 4.59% 1.47% 15.99% 2.78% -0.02%
Qualcomm Inc. 14.84% 14.19% 16.37% 1,215.96% 54.68% 20.15%
Texas Instruments Inc. 9.63% 11.38% 18.14% 37.69% 31.13%

Based on: 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28), 10-K (reporting date: 2017-10-29), 10-K (reporting date: 2016-10-30).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2021 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 874 ÷ 7,069 = 12.36%

4 Click competitor name to see calculations.

Tax rate Description The company
CTR Effective cash tax rate on operating income. Applied Materials Inc. CTR decreased from 2019 to 2020 but then slightly increased from 2020 to 2021.