Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Applied Materials Inc. (NASDAQ:AMAT)

Return on Capital (ROC)

Advanced level

Return on Invested Capital (ROIC)

Applied Materials Inc., ROIC calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Oct 25, 2020 Oct 27, 2019 Oct 28, 2018 Oct 29, 2017 Oct 30, 2016 Oct 25, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 3,872  2,928  3,303  3,953  2,092  1,291 
Invested capital2 13,090  10,129  11,090  12,475  10,186  11,631 
Performance Ratio
ROIC3 29.58% 28.91% 29.78% 31.69% 20.54% 11.10%
Benchmarks
ROIC, Competitors4
Advanced Micro Devices Inc. 30.67% 11.73% 13.53% 2.05% -14.86%
Analog Devices Inc. 6.95% 8.23% 4.98% 0.38% 23.10% 15.63%
Apple Inc. 150.10% 98.34% 83.60% 101.81% 114.33% 142.21%
Broadcom Inc. 4.80% 5.00% 10.03% 3.52% -1.55% 15.58%
Cisco Systems Inc. 24.12% 18.12% 2.85% 19.68% 23.64% 22.15%
Intel Corp. 27.99% 26.74% 23.84% 10.03% 16.51%
Lam Research Corp. 24.20% 20.10% 25.72% 31.56% 10.67% 15.45%
Micron Technology Inc. 6.84% 17.15% 39.70% 18.99% -0.03% 19.12%
NVIDIA Corp. 19.63% 79.86% 41.40% 40.74% 31.19%
Qualcomm Inc. 27.48% 28.27% -16.74% 1.92% 27.12% 19.77%
Texas Instruments Inc. 43.48% 43.15% 44.66% 32.30% 28.86%

Based on: 10-K (filing date: 2020-12-11), 10-K (filing date: 2019-12-13), 10-K (filing date: 2018-12-13), 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09).

1 NOPAT. See details »

2 Invested capital. See details »

3 2020 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 3,872 ÷ 13,090 = 29.58%

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.’s ROIC deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level.

Decomposition of ROIC

Applied Materials Inc., decomposition of ROIC

Microsoft Excel LibreOffice Calc
ROIC = OPM1 × TO2 × 1 – CTR3
Oct 25, 2020 29.58% = 25.57% × 1.31 × 88.02%
Oct 27, 2019 28.91% = 23.89% × 1.44 × 83.91%
Oct 28, 2018 29.78% = 26.89% × 1.52 × 72.82%
Oct 29, 2017 31.69% = 29.01% × 1.20 × 91.33%
Oct 30, 2016 20.54% = 22.15% × 1.09 × 85.13%
Oct 25, 2015 11.10% = 17.40% × 0.83 × 77.00%

Based on: 10-K (filing date: 2020-12-11), 10-K (filing date: 2019-12-13), 10-K (filing date: 2018-12-13), 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09).

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 2020 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 25, 2020 Oct 27, 2019 Oct 28, 2018 Oct 29, 2017 Oct 30, 2016 Oct 25, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 3,872  2,928  3,303  3,953  2,092  1,291 
Add: Cash operating taxes2 527  561  1,233  375  365  386 
Net operating profit before taxes (NOPBT) 4,399  3,489  4,536  4,328  2,458  1,677 
 
Net sales 17,202  14,608  17,253  14,537  10,825  9,659 
Add: Increase (decrease) in deferred revenue —  —  (381) 379  272  (21)
Adjusted net sales 17,202  14,608  16,872  14,916  11,097  9,638 
Profitability Ratio
OPM3 25.57% 23.89% 26.89% 29.01% 22.15% 17.40%
Benchmarks
OPM, Competitors4
Advanced Micro Devices Inc. 13.98% 6.80% 5.88% 2.42% -5.94%
Analog Devices Inc. 26.98% 29.60% 30.11% 21.16% 30.31% 23.13%
Apple Inc. 24.65% 24.64% 26.58% 26.64% 26.39% 30.76%
Broadcom Inc. 17.10% 15.65% 24.22% 12.14% -2.93% 24.07%
Cisco Systems Inc. 30.47% 25.46% 26.21% 27.94% 27.26% 23.84%
Intel Corp. 32.65% 33.40% 30.95% 26.66% 21.44%
Lam Research Corp. 27.26% 20.46% 29.43% 27.76% 18.88% 18.03%
Micron Technology Inc. 14.37% 29.89% 47.86% 28.39% 1.37% 21.08%
NVIDIA Corp. 26.65% 33.09% 32.77% 24.50% 14.96%
Qualcomm Inc. 24.17% 29.86% 1.24% 9.45% 26.09% 20.10%
Texas Instruments Inc. 43.13% 40.81% 43.25% 41.06% 37.64%

Based on: 10-K (filing date: 2020-12-11), 10-K (filing date: 2019-12-13), 10-K (filing date: 2018-12-13), 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2020 Calculation
OPM = 100 × NOPBT ÷ Adjusted net sales
= 100 × 4,399 ÷ 17,202 = 25.57%

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.’s OPM deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level.

Turnover of Capital (TO)

Applied Materials Inc., TO calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Oct 25, 2020 Oct 27, 2019 Oct 28, 2018 Oct 29, 2017 Oct 30, 2016 Oct 25, 2015
Selected Financial Data (US$ in millions)
Net sales 17,202  14,608  17,253  14,537  10,825  9,659 
Add: Increase (decrease) in deferred revenue —  —  (381) 379  272  (21)
Adjusted net sales 17,202  14,608  16,872  14,916  11,097  9,638 
 
Invested capital1 13,090  10,129  11,090  12,475  10,186  11,631 
Efficiency Ratio
TO2 1.31 1.44 1.52 1.20 1.09 0.83
Benchmarks
TO, Competitors3
Advanced Micro Devices Inc. 2.23 1.97 2.43 2.39 1.90
Analog Devices Inc. 0.31 0.33 0.33 0.26 0.85 0.86
Apple Inc. 7.10 4.79 8.83 4.47 5.26 6.05
Broadcom Inc. 0.36 0.38 0.47 0.35 0.29 0.81
Cisco Systems Inc. 0.96 0.95 1.00 0.87 1.04 1.13
Intel Corp. 0.95 0.89 0.94 0.94 0.92
Lam Research Corp. 1.02 1.15 1.15 1.15 0.64 0.95
Micron Technology Inc. 0.51 0.60 0.86 0.71 0.56 0.97
NVIDIA Corp. 0.77 2.45 1.50 1.71 2.08
Qualcomm Inc. 1.33 1.13 1.21 0.45 1.30 1.21
Texas Instruments Inc. 1.12 1.19 1.26 1.26 1.11

Based on: 10-K (filing date: 2020-12-11), 10-K (filing date: 2019-12-13), 10-K (filing date: 2018-12-13), 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09).

1 Invested capital. See details »

2 2020 Calculation
TO = Adjusted net sales ÷ Invested capital
= 17,202 ÷ 13,090 = 1.31

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.’s TO deteriorated from 2018 to 2019 and from 2019 to 2020.

Effective Cash Tax Rate (CTR)

Applied Materials Inc., CTR calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Oct 25, 2020 Oct 27, 2019 Oct 28, 2018 Oct 29, 2017 Oct 30, 2016 Oct 25, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 3,872  2,928  3,303  3,953  2,092  1,291 
Add: Cash operating taxes2 527  561  1,233  375  365  386 
Net operating profit before taxes (NOPBT) 4,399  3,489  4,536  4,328  2,458  1,677 
Tax Rate
CTR3 11.98% 16.09% 27.18% 8.67% 14.87% 23.00%
Benchmarks
CTR, Competitors4
Advanced Micro Devices Inc. 1.75% 12.55% 5.44% 64.46%
Analog Devices Inc. 16.31% 14.82% 50.33% 93.08% 10.78% 21.70%
Apple Inc. 14.27% 16.60% 64.38% 14.50% 17.63% 23.61%
Broadcom Inc. 22.63% 15.10% 11.38% 16.03% 19.97%
Cisco Systems Inc. 17.40% 24.92% 89.18% 19.15% 16.48% 17.77%
Intel Corp. 9.76% 10.33% 18.16% 59.84% 16.68%
Lam Research Corp. 13.09% 14.26% 24.00% 1.52% 11.77% 10.13%
Micron Technology Inc. 6.13% 4.94% 3.36% 6.08% 104.15% 6.24%
NVIDIA Corp. 4.59% 1.47% 15.99% 2.78% -0.02%
Qualcomm Inc. 14.19% 16.37% 1,215.96% 54.68% 20.15% 19.01%
Texas Instruments Inc. 9.63% 11.38% 18.14% 37.69% 31.13%

Based on: 10-K (filing date: 2020-12-11), 10-K (filing date: 2019-12-13), 10-K (filing date: 2018-12-13), 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2020 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 527 ÷ 4,399 = 11.98%

4 Click competitor name to see calculations.

Tax rate Description The company
CTR Effective cash tax rate on operating income. Applied Materials Inc.’s CTR decreased from 2018 to 2019 and from 2019 to 2020.