Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Applied Materials Inc., profitability ratios
Based on: 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27).
- Gross Profit Margin
- The gross profit margin exhibits an overall upward trend from 43.72% in 2019 to 47.46% in 2024. This indicates a steady improvement in the company's core profitability, with a notable increase particularly between 2020 and 2021. Although there is a slight dip in 2022, the margin recovers and continues to increase through 2024.
- Operating Profit Margin
- The operating profit margin follows an increasing trajectory from 22.93% in 2019 to a peak of 30.2% in 2022. Following this peak, it experiences a minor decline in 2023 and marginal improvement in 2024, stabilizing around 28.9%. This suggests enhanced operational efficiency and control over operating expenses over the years, with some recent pressure possibly impacting profitability slightly after 2022.
- Net Profit Margin
- The net profit margin consistently rises from 18.52% in 2019 to 26.41% in 2024, reflecting continuous growth in the company's bottom-line profitability. The margin gains are steady, with only a minimal decrease in 2022, indicating solid net income generation relative to revenues despite possible external or operational challenges.
- Return on Equity (ROE)
- ROE increases significantly from 32.94% in 2019 to a high of 53.51% in 2022, highlighting an effective use of shareholders' equity to generate profits. However, after 2022, there is a sharp decline to 41.94% in 2023 and further to 37.77% in 2024. This drop may point to changes in equity structure, lower net income, or increased equity base, signaling a potential reduction in equity profitability despite stable profit margins.
- Return on Assets (ROA)
- The ROA rises from 14.22% in 2019 to 24.41% in 2022, illustrating improved efficiency in asset utilization to generate income. Following the peak in 2022, ROA declines to 22.31% in 2023 and further down to 20.86% in 2024, indicating a reduction in asset profitability, which may reflect asset base growth outpacing income or other operational factors impacting returns on assets.
Return on Sales
Return on Investment
Gross Profit Margin
Applied Materials Inc., gross profit margin calculation, comparison to benchmarks
| Oct 27, 2024 | Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Gross profit | 12,897) | 12,384) | 11,993) | 10,914) | 7,692) | 6,386) | |
| Net revenue | 27,176) | 26,517) | 25,785) | 23,063) | 17,202) | 14,608) | |
| Profitability Ratio | |||||||
| Gross profit margin1 | 47.46% | 46.70% | 46.51% | 47.32% | 44.72% | 43.72% | |
| Benchmarks | |||||||
| Gross Profit Margin, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 49.35% | 46.12% | 44.93% | 48.25% | 44.53% | — | |
| Analog Devices Inc. | 57.08% | 64.01% | 62.70% | 61.83% | 65.87% | 67.00% | |
| Broadcom Inc. | 63.03% | 68.93% | 66.55% | 61.36% | 56.58% | 55.24% | |
| Intel Corp. | 32.66% | 40.04% | 42.61% | 55.45% | 56.01% | — | |
| KLA Corp. | 59.97% | 59.81% | 61.00% | 59.93% | 57.81% | 59.08% | |
| Lam Research Corp. | 47.32% | 44.62% | 45.69% | 46.53% | 45.88% | 45.15% | |
| Micron Technology Inc. | 22.35% | -9.11% | 45.18% | 37.62% | 30.57% | 45.72% | |
| NVIDIA Corp. | 72.72% | 56.93% | 64.93% | 62.34% | 61.99% | — | |
| Qualcomm Inc. | 56.21% | 55.70% | 57.84% | 57.51% | 60.67% | 64.57% | |
| Texas Instruments Inc. | 58.14% | 62.90% | 68.76% | 67.47% | 64.10% | — | |
Based on: 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27).
1 2024 Calculation
Gross profit margin = 100 × Gross profit ÷ Net revenue
= 100 × 12,897 ÷ 27,176 = 47.46%
2 Click competitor name to see calculations.
- Gross Profit
- The gross profit shows a consistent upward trend over the six-year period. Starting from US$6,386 million in late 2019, it increased to US$12,897 million by late 2024. This represents more than a doubling of gross profit within the timeframe, indicating strong operational performance and effective cost management relative to revenue growth.
- Net Revenue
- Net revenue also demonstrates a steady increase, rising from US$14,608 million in late 2019 to US$27,176 million in late 2024. Revenue growth is robust, with a notable acceleration between 2020 and 2021 and continuing through the subsequent years, reflecting expanding sales and market presence.
- Gross Profit Margin
- The gross profit margin has generally improved throughout the period. Beginning at 43.72% in 2019, it rose to a peak of 47.46% in 2024. The margin increment is somewhat variable, with a slight dip in 2022 but overall maintaining an upward trajectory. This indicates improved efficiency or favorable product mix contributing positively to profitability.
Operating Profit Margin
Applied Materials Inc., operating profit margin calculation, comparison to benchmarks
| Oct 27, 2024 | Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Income from operations | 7,867) | 7,654) | 7,788) | 6,889) | 4,365) | 3,350) | |
| Net revenue | 27,176) | 26,517) | 25,785) | 23,063) | 17,202) | 14,608) | |
| Profitability Ratio | |||||||
| Operating profit margin1 | 28.95% | 28.86% | 30.20% | 29.87% | 25.37% | 22.93% | |
| Benchmarks | |||||||
| Operating Profit Margin, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 7.37% | 1.77% | 5.36% | 22.20% | 14.02% | — | |
| Analog Devices Inc. | 21.56% | 31.07% | 27.29% | 23.12% | 26.74% | 28.55% | |
| Broadcom Inc. | 26.10% | 45.25% | 42.84% | 31.03% | 16.80% | 15.24% | |
| Intel Corp. | -21.99% | 0.17% | 3.70% | 24.62% | 30.41% | — | |
| KLA Corp. | 34.10% | 38.06% | 39.67% | 35.97% | 25.87% | 30.41% | |
| Lam Research Corp. | 28.61% | 29.69% | 31.24% | 30.64% | 26.62% | 25.53% | |
| Micron Technology Inc. | 5.19% | -36.97% | 31.54% | 22.68% | 14.01% | 31.51% | |
| NVIDIA Corp. | 54.12% | 15.66% | 37.31% | 27.18% | 26.07% | — | |
| Qualcomm Inc. | 25.85% | 21.74% | 35.88% | 29.16% | 26.58% | 31.59% | |
| Texas Instruments Inc. | 34.94% | 41.85% | 50.63% | 48.84% | 40.76% | — | |
| Operating Profit Margin, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 21.36% | 18.50% | 27.34% | 28.30% | 25.89% | — | |
| Operating Profit Margin, Industry | |||||||
| Information Technology | 26.58% | 24.45% | 26.39% | 26.70% | 22.67% | — | |
Based on: 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27).
1 2024 Calculation
Operating profit margin = 100 × Income from operations ÷ Net revenue
= 100 × 7,867 ÷ 27,176 = 28.95%
2 Click competitor name to see calculations.
- Net Revenue
- Net revenue has demonstrated a consistent upward trajectory over the six-year period. Starting at 14,608 million US dollars in 2019, there was a significant increase each year, culminating in 27,176 million US dollars by 2024. This growth reflects an overall positive expansion in the company's sales and market presence.
- Income from Operations
- Income from operations has also shown a steady increase during the timeframe analyzed. Starting from 3,350 million US dollars in 2019, the figure grew to 7,867 million US dollars by 2024. The rate of growth, especially between 2020 and 2021, was pronounced, indicating improved operational efficiency or scale.
- Operating Profit Margin
- The operating profit margin exhibited an upward trend from 22.93% in 2019 to a peak of 30.20% in 2022, indicating enhanced profitability relative to revenue. However, a slight decline was observed in 2023, with the margin lowering to 28.86%, before a modest recovery to 28.95% in 2024. Overall, the margins remained relatively stable and strong, suggesting effective cost control and operational performance.
- Summary of Trends
- The company has shown robust growth in net revenue and income from operations over the period considered, reflecting successful business expansion. Operating profit margins improved substantially in the initial years and stabilized near 29% in the last two years, highlighting sustained operational efficiency. Minor fluctuations in margins in the recent two years may warrant further investigation but do not detract from the overall positive financial health and performance trend.
Net Profit Margin
Applied Materials Inc., net profit margin calculation, comparison to benchmarks
| Oct 27, 2024 | Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net income | 7,177) | 6,856) | 6,525) | 5,888) | 3,619) | 2,706) | |
| Net revenue | 27,176) | 26,517) | 25,785) | 23,063) | 17,202) | 14,608) | |
| Profitability Ratio | |||||||
| Net profit margin1 | 26.41% | 25.86% | 25.31% | 25.53% | 21.04% | 18.52% | |
| Benchmarks | |||||||
| Net Profit Margin, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 6.36% | 3.77% | 5.59% | 19.24% | 25.50% | — | |
| Analog Devices Inc. | 17.35% | 26.94% | 22.88% | 19.00% | 21.79% | 22.75% | |
| Broadcom Inc. | 11.43% | 39.31% | 34.62% | 24.54% | 12.39% | 12.05% | |
| Intel Corp. | -35.32% | 3.11% | 12.71% | 25.14% | 26.84% | — | |
| KLA Corp. | 28.15% | 32.27% | 36.06% | 30.04% | 20.96% | 25.73% | |
| Lam Research Corp. | 25.68% | 25.88% | 26.73% | 26.72% | 22.42% | 22.70% | |
| Micron Technology Inc. | 3.10% | -37.54% | 28.24% | 21.16% | 12.54% | 26.97% | |
| NVIDIA Corp. | 48.85% | 16.19% | 36.23% | 25.98% | 25.61% | — | |
| Qualcomm Inc. | 26.03% | 20.19% | 29.27% | 26.94% | 22.09% | 18.07% | |
| Texas Instruments Inc. | 30.68% | 37.16% | 43.68% | 42.35% | 38.69% | — | |
| Net Profit Margin, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 14.94% | 17.06% | 25.54% | 25.83% | 23.10% | — | |
| Net Profit Margin, Industry | |||||||
| Information Technology | 20.61% | 20.36% | 22.42% | 23.60% | 19.65% | — | |
Based on: 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27).
1 2024 Calculation
Net profit margin = 100 × Net income ÷ Net revenue
= 100 × 7,177 ÷ 27,176 = 26.41%
2 Click competitor name to see calculations.
- Net Income
- The net income demonstrates a consistent upward trend over the six-year period. Starting at 2,706 million USD in 2019, it rises annually, reaching 7,177 million USD by 2024. The most significant increases occur between 2020 and 2021, and 2021 to 2022, indicating substantial growth in profitability during these intervals.
- Net Revenue
- Net revenue also shows a strong and steady growth trajectory. From 14,608 million USD in 2019, it expands each year, culminating at 27,176 million USD in 2024. Growth is particularly notable from 2020 to 2021 and 2021 to 2022, consistent with rises in net income, which may suggest improved operational scale or market demand during this timeframe.
- Net Profit Margin
- The net profit margin exhibits a gradual but consistent improvement. Beginning at 18.52% in 2019, it increases steadily year over year, reaching 26.41% by 2024. This rise in margin indicates growing efficiency or better cost management relative to revenue, contributing positively to overall profitability.
Return on Equity (ROE)
Applied Materials Inc., ROE calculation, comparison to benchmarks
| Oct 27, 2024 | Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net income | 7,177) | 6,856) | 6,525) | 5,888) | 3,619) | 2,706) | |
| Stockholders’ equity | 19,001) | 16,349) | 12,194) | 12,247) | 10,578) | 8,214) | |
| Profitability Ratio | |||||||
| ROE1 | 37.77% | 41.94% | 53.51% | 48.08% | 34.21% | 32.94% | |
| Benchmarks | |||||||
| ROE, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 2.85% | 1.53% | 2.41% | 42.18% | 42.66% | — | |
| Analog Devices Inc. | 4.65% | 9.32% | 7.54% | 3.66% | 10.17% | 11.64% | |
| Broadcom Inc. | 8.71% | 58.70% | 50.62% | 26.99% | 12.40% | 10.92% | |
| Intel Corp. | -18.89% | 1.60% | 7.90% | 20.83% | 25.79% | — | |
| KLA Corp. | 82.00% | 116.01% | 237.04% | 61.53% | 45.65% | 44.21% | |
| Lam Research Corp. | 44.82% | 54.94% | 73.35% | 64.85% | 43.53% | 46.89% | |
| Micron Technology Inc. | 1.72% | -13.22% | 17.41% | 13.34% | 6.89% | 17.59% | |
| NVIDIA Corp. | 69.24% | 19.76% | 36.65% | 25.64% | 22.91% | — | |
| Qualcomm Inc. | 38.60% | 33.51% | 71.81% | 90.88% | 85.54% | 89.35% | |
| Texas Instruments Inc. | 28.39% | 38.53% | 60.02% | 58.27% | 60.90% | — | |
| ROE, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 11.77% | 13.30% | 22.70% | 25.79% | 24.53% | — | |
| ROE, Industry | |||||||
| Information Technology | 29.31% | 31.93% | 39.07% | 42.41% | 35.69% | — | |
Based on: 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27).
1 2024 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 7,177 ÷ 19,001 = 37.77%
2 Click competitor name to see calculations.
- Net Income
- Net income demonstrates a consistent upward trend over the periods analyzed. Starting from $2,706 million in 2019, it increased steadily each year, reaching $7,177 million by 2024. This indicates an overall strong growth in profitability.
- Stockholders’ Equity
- Stockholders' equity shows a general increase across the timeline with some acceleration in later years. Beginning at $8,214 million in 2019, it rose to $19,001 million by 2024. This growth represents an expansion of the company's net assets and potential reinvestment of earnings or other equity financing events.
- Return on Equity (ROE)
- Return on equity fluctuated but maintained relatively high values throughout the periods. The ratio grew from 32.94% in 2019 to peak at 53.51% in 2022, before moderating to 37.77% in 2024. Despite this recent decline from the peak, ROE remains strong, indicating effective utilization of equity to generate profit.
Return on Assets (ROA)
Applied Materials Inc., ROA calculation, comparison to benchmarks
| Oct 27, 2024 | Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net income | 7,177) | 6,856) | 6,525) | 5,888) | 3,619) | 2,706) | |
| Total assets | 34,409) | 30,729) | 26,726) | 25,825) | 22,353) | 19,024) | |
| Profitability Ratio | |||||||
| ROA1 | 20.86% | 22.31% | 24.41% | 22.80% | 16.19% | 14.22% | |
| Benchmarks | |||||||
| ROA, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 2.37% | 1.26% | 1.95% | 25.46% | 27.78% | — | |
| Analog Devices Inc. | 3.39% | 6.79% | 5.46% | 2.66% | 5.69% | 6.37% | |
| Broadcom Inc. | 3.56% | 19.33% | 15.69% | 8.91% | 3.90% | 4.04% | |
| Intel Corp. | -9.55% | 0.88% | 4.40% | 11.80% | 13.65% | — | |
| KLA Corp. | 17.90% | 24.07% | 26.37% | 20.23% | 13.11% | 13.05% | |
| Lam Research Corp. | 20.42% | 24.02% | 26.78% | 24.59% | 15.47% | 18.26% | |
| Micron Technology Inc. | 1.12% | -9.08% | 13.11% | 9.96% | 5.01% | 12.91% | |
| NVIDIA Corp. | 45.28% | 10.61% | 22.07% | 15.05% | 16.15% | — | |
| Qualcomm Inc. | 18.39% | 14.17% | 26.39% | 21.93% | 14.60% | 13.31% | |
| Texas Instruments Inc. | 13.51% | 20.12% | 32.16% | 31.48% | 28.91% | — | |
| ROA, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 6.42% | 7.41% | 12.68% | 13.62% | 11.80% | — | |
| ROA, Industry | |||||||
| Information Technology | 11.93% | 12.50% | 14.55% | 14.65% | 11.44% | — | |
Based on: 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27).
1 2024 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × 7,177 ÷ 34,409 = 20.86%
2 Click competitor name to see calculations.
- Net Income
- There is a consistent upward trend in net income over the six-year period. Starting from 2,706 million US dollars in 2019, net income increased substantially each year, reaching 7,177 million US dollars in 2024. This reflects strong profit growth and improved financial performance over the years.
- Total Assets
- Total assets show a steady increase from 19,024 million US dollars in 2019 to 34,409 million US dollars in 2024. This growth indicates ongoing asset accumulation, which may be due to business expansion, acquisition, or investment in operational capacity.
- Return on Assets (ROA)
- The ROA percentage displays a rising trend from 14.22% in 2019 to a peak of 24.41% in 2022, demonstrating enhanced efficiency in utilizing assets to generate earnings. However, in 2023 and 2024, ROA declines slightly to 22.31% and 20.86%, respectively, suggesting a moderate decrease in asset utilization efficiency despite increasing net income and assets.
Overall, the data indicates significant growth in profitability and asset base over the examined period. While the company has improved its return on assets substantially until 2022, the slight decline in subsequent years may warrant further examination to understand underlying factors affecting operational efficiency.