Expedia Group Inc. (NASDAQ:EXPE)

The financial data reveals notable trends in return on assets (ROA), financial leverage, and return on equity (ROE) over the observation period.

Return on Assets (ROA)

The ROA displays moderate positive values throughout 2017 to early 2020, ranging approximately between 1.3% and 2.8%, indicating modest asset profitability. However, from March 2020 onwards, coinciding with the onset of the COVID-19 pandemic, there is a sharp decline into negative territory, reaching a low point around -13.98% in December 2020. This significant downturn suggests substantial challenges in generating returns from assets during this period. Subsequently, from early 2021 forward, ROA shows a recovery trajectory, moving from deeply negative values back into positive territory by March 2022, reaching 1.9%, reflecting a gradual restoration of asset efficiency.

Financial Leverage

The financial leverage ratio maintains a relatively stable range between about 4.1 and 5.4 from 2017 through December 2019, indicative of consistent use of debt relative to equity. Beginning in March 2020, there is a sharp increase in leverage, peaking at 15.05 in June 2021, suggesting a significant increase in debt financing or decreased equity base during the pandemic period. While the leverage ratio slightly decreases afterward, it remains elevated compared to pre-pandemic levels, ending at 11.83 by March 2022. This pattern implies increased financial risk and potential pressure on the capital structure during and subsequent to the crisis.

Return on Equity (ROE)

ROE exhibits a positive trend from early data points through 2019, fluctuating between approximately 6.8% and 14.3%, signaling healthy profitability relative to shareholders' equity. However, after March 2020, ROE plunges drastically into negative values, reaching an extreme low close to -103.16% at the end of 2020. This reflects severe losses and erosion of equity value during the pandemic. The recovery begins in 2021, with ROE improving rapidly from -35.81% in September 2021 to positive territory by March 2022, reaching 22.52%. This sharp rebound indicates a strong recovery in profitability and restoration of shareholder value post-pandemic challenges.

In summary, the company experienced a period of stable profitability and moderate leverage up to early 2020, followed by a severe deterioration in returns and a substantial increase in financial leverage during the pandemic. The subsequent recovery observed in 2021 and early 2022 points toward improving operational performance and financial stability, although leverage remains elevated relative to pre-pandemic levels, indicating ongoing caution regarding financial risk management.

The analysis of the financial ratios over the examined periods reveals notable trends and fluctuations in profitability, efficiency, and leverage.

Net Profit Margin

The net profit margin shows relatively stable positive values from early 2017 through early 2019, fluctuating between approximately 2.5% and 5.4%. Beginning in the first quarter of 2020, a sharp decline is observed, with the margin dropping into substantial negative territory, reaching a low point of -50.24% in the fourth quarter of 2020. Subsequently, the margin improves progressively throughout 2021 and into early 2022, returning to positive territory by the first quarter of 2022 at 4.87%. This pattern suggests significant profitability challenges during 2020, likely due to adverse external factors, followed by a gradual recovery.

Asset Turnover

Asset turnover remains fairly consistent at around 0.5 to 0.6 from 2017 through early 2019, indicating stable asset utilization. From the first quarter of 2020, a marked decline occurs, with the ratio decreasing to as low as 0.19 in the fourth quarter of 2020, implying reduced efficiency in using assets to generate revenue during that period. A gradual recovery is again evident, with asset turnover rising to 0.39 by the first quarter of 2022. This suggests that the company's operational efficiency was significantly impaired during 2020 but improved thereafter.

Financial Leverage

Financial leverage exhibits a gradual increase over the full timeline. Starting from around 4.1-5.4 in the earlier years, it escalates sharply in 2020, peaking at 15.05 in the second quarter of 2021. Despite some reductions afterward, leverage remains elevated, ending at 11.83 in the first quarter of 2022. This trend indicates increasing reliance on debt or other liabilities relative to equity, which coincides with the periods of profitability decline and recovery.

Return on Equity (ROE)

ROE mirrors the trends observed in net profit margin and asset turnover, with positive performance from 2017 through early 2019, ranging from approximately 6.8% to 14.3%. From early 2020, ROE collapses to deeply negative values, reaching a nadir of -103.16% in the fourth quarter of 2020. The subsequent timeline reveals a notable rebound, with ROE climbing back to 22.52% by the first quarter of 2022. This pattern reflects severe losses during 2020 alongside amplified financial leverage impacts, followed by a significant recovery in shareholder returns.

In summary, the data reflects a period of operational stability and profitability prior to 2020, followed by severe financial stress and declines in key performance metrics during 2020. The trends indicate a strong disruptive event impacting profitability, efficiency, and leverage ratios. However, a recovery phase is evident through 2021 and into early 2022, characterized by improvement in profitability margins, asset turnover, and returns on equity, albeit with continuing elevated financial leverage.

The analysis of the financial ratios over the given quarterly periods reveals several distinct trends and fluctuations.

Tax Burden

The tax burden ratio shows variability but generally remains in the range of approximately 0.72 to 0.94 in the periods without missing data. There is a notable increase to 0.94 by the most recent period, suggesting an increasing portion of earnings before tax being retained after tax obligations.

Interest Burden

The interest burden ratio fluctuates with values mostly between 0.63 and 0.82 during earlier periods. An unusual negative value of -0.13 emerges during the March 31, 2022 quarter, followed by a recovery to 0.6 in the same year. This anomaly indicates significant interest-related issues or accounting adjustments during those quarters.

EBIT Margin

The EBIT margin demonstrates relatively stable positive values early on, between approximately 5% and 8%. Starting at the end of 2019 and continuing through 2021, there is a sharp and sustained decline into negative territory, reaching a low point below -50%. The margin recovers somewhat in the latest quarters to positive figures near 8.7%, indicating operational profit margin challenges particularly during the earlier pandemic period and partial recovery thereafter.

Asset Turnover

Asset turnover remains around 0.5 to 0.57 across the initial years, indicating steady efficiency in asset utilization. However, from 2020 onwards, there is a marked decline, hitting lows near 0.19, and only a gradual increase back up to around 0.4 by early 2022. This suggests decreased operational activity or asset usage efficiency during the pandemic, with ongoing recovery visible later.

Financial Leverage

The company's financial leverage ratio increases significantly over time. Early periods show leverage around 4 to 5, escalating sharply to levels above 7 and peaking at over 15 in mid-2021. This sharp increase indicates growing reliance on debt or other forms of leverage, which may carry increased financial risk.

Return on Equity (ROE)

Return on equity initially displays moderate positive returns, mostly in the range of 6% to 14%. Starting in early 2020, there is a severe deterioration into large negative returns, reaching below -100% in several quarters, indicating substantial losses or equity erosion during this period. Towards 2021 and 2022, ROE improves markedly, becoming positive again by the most recent period, suggesting a recovery in profitability and equity value generation.

In summary, the data depict a period of financial stress and operational challenges beginning around early 2020, likely reflecting adverse external conditions. Profitability measures including EBIT margin and ROE suffered sharp declines, while efficiency as measured by asset turnover also weakened. Concurrently, financial leverage increased markedly, heightening financial risk. More recent quarters show signs of stabilization and recovery, with improvements in profitability and operational efficiency but sustained elevated leverage levels.

The financial data reveals notable trends in profitability and efficiency metrics over the observed periods. Net profit margin exhibited a positive trajectory from the first measurement in March 2018 through the fourth quarter of 2019, peaking at 5.36% in the third quarter of 2019. However, a sharp decline followed starting from March 2020, coinciding with a negative margin of -5.43%, which deepened to -50.24% by the end of 2020. This substantial deterioration reflects significant operational challenges during this period. By early 2021, margins gradually improved, returning to positive territory and reaching 4.87% by March 2022.

Asset turnover showed relative stability from March 2018 through the first quarter of 2020, fluctuating slightly around the mid-0.5 range, with a peak of 0.62 in the first quarter of 2019. However, starting in the second quarter of 2020, asset turnover declined sharply to a low of 0.19 in the fourth quarter of 2020. A recovery trend is observable in 2021, with ratios increasing to approximately 0.4 by March 2022, indicating gradual improvement in asset utilization.

Return on assets (ROA) mirrored the patterns found in net profit margin and asset turnover. Positive values persisted until the end of 2019, with a high of 2.8% in the third quarter of 2019. ROA turned negative beginning in the first quarter of 2020, reaching its worst value of -13.98% in the fourth quarter of 2020. Starting in early 2021, ROA recovered steadily, turning positive by the first quarter of 2022 and reaching 1.9% by March 2022. This recovery, albeit gradual, suggests improvements in both profitability and asset efficiency.

Overall, the data indicates a period of operational and financial stress beginning in early 2020, characterized by sharp declines in profitability, operational efficiency, and returns. This decline corresponds temporally with global economic disruptions. The subsequent partial recovery in 2021 and early 2022 shows improvements in these areas but has yet to return fully to pre-2020 levels in asset turnover and ROA, though net profit margin nearly returned to previous positive values by March 2022.

Tax Burden

The tax burden ratio shows moderate fluctuation between 2018 and 2019, generally ranging from 0.72 to 0.87, indicating some variability in the portion of earnings retained after taxes during this period. Data gaps exist for several quarters, but the latest available figure in early 2022 rises to 0.94, suggesting an improved retention of income post-taxation toward the end of the timeframe.

Interest Burden

This ratio exhibits some volatility with generally positive values around 0.63 to 0.82 from 2018 through 2019, signaling a stable capacity to cover interest expenses with operating earnings. However, there is a notable negative value in early 2022 (-0.13) before recovering to 0.6, which may indicate an unusual interest expense or financial event temporarily eroding operational income before interest during that quarter.

EBIT Margin

The EBIT margin maintained positive single-digit percentages during 2017 through 2019, fluctuating between approximately 5% and 8%. A sharp decline began in early 2020 with a negative margin of -2.48%, progressively worsening throughout 2020 and 2021, reaching a low point of -51.45% by the end of 2020. Recovery is observed starting in early 2021, trending upward from large negative values to positive territory near 8.68% by early 2022. This pattern likely reflects significant operational challenges and subsequent gradual improvement.

Asset Turnover

Asset turnover ratios hovered between 0.51 and 0.62 up to late 2019, showing stable efficiency in generating revenue from assets. Beginning in 2020, the ratio declined notably to a low of 0.19, indicating reduced asset utilization effectiveness during the pandemic-impacted period. A gradual rebound is visible from late 2020 onwards, reaching close to 0.4 by the first quarter of 2022, though still below pre-2020 levels.

Return on Assets (ROA)

The ROA followed a pattern consistent with other profitability measures. Positive albeit modest values between 1.32% and 2.8% were prevalent through 2017 to 2019, reflecting steady asset profitability. Early 2020 marked a sharp downturn into negative ROA figures, dropping as low as -13.98% in late 2020, corresponding with EBIT margin declines and reduced asset turnover. Partial recovery has occurred since early 2021, with the ROA rising close to 1.9% by early 2022, but remaining below historical highs.

The financial data reveals multiple trends across the presented periods, particularly focusing on profitability and burden ratios.

Tax Burden

The tax burden ratio emerges starting in the first quarter of 2018, fluctuating mainly between 0.72 and 0.94. Notably, it reaches a low of 0.72 at the end of 2019, suggesting a relatively lower tax expense relative to earnings during that period, and peaks at 0.94 in the first quarter of 2022, indicating a higher portion of earnings allocated to taxes. The general pattern indicates variability without a consistent upward or downward trend.

Interest Burden

This ratio is available from the first quarter of 2018 onwards. Initially, it declines from 0.7 in the first quarter of 2018 to 0.63 in the third quarter of the same year, implying improved interest expense management. Subsequently, the ratio fluctuates around the low 0.7s to 0.8s until the end of 2019. Anomalies appear in recent periods, with a negative value (-0.13) in the first quarter of 2022, followed by a rebound to 0.6, which may suggest accounting irregularities or one-time adjustments impacting interest expenses. Overall, the pattern is inconsistent, requiring further investigation to understand underlying causes.

EBIT Margin

The EBIT margin demonstrates a generally stable range from the first quarter of 2018 through the first quarter of 2019, with values between approximately 5% and nearly 8%. However, starting from the first quarter of 2020, the margin experiences a steep decline, reaching extreme negative values by the end of 2020 and into 2021, indicating significant operating losses. A recovery trend begins in late 2021 and continues into early 2022, returning to positive territory by the first quarter of 2022. This pattern suggests substantial operational challenges during the 2020–2021 period, followed by improvements.

Net Profit Margin

The net profit margin behavior closely mirrors that of the EBIT margin, with positive yet modest percentages through early 2019. From the first quarter of 2020, the margin plunges sharply to negative levels, hitting a low near -50% at the end of 2020 and remaining substantially negative throughout much of 2021. Improvement is noted from late 2021 onwards, culminating in positive net margins by early 2022. This pattern highlights a period of significant net losses, likely due to extraordinary events or operational difficulties, with signs of returning profitability toward the most recent periods.

In summary, the data portrays a period of relative operating stability and moderate profitability until early 2020, when both EBIT and net profit margins drastically deteriorated. Corresponding tax and interest burden ratios show variability, with some notable anomalies in the most recent quarters. The recovery trajectory in profitability metrics starting in late 2021 and continuing into 2022 suggests potentially improving operational efficiency and financial health after a period of significant financial strain.