Intel Corp. (NASDAQ:INTC)

The financial performance, as indicated by the two-component disaggregation of Return on Equity (ROE), reveals a significant deterioration over the five-year period. Return on Assets (ROA) experienced a substantial decline, while Financial Leverage generally increased, though with a slight decrease in the most recent year. These movements have resulted in a dramatic reduction in ROE.

Return on Assets (ROA)

ROA demonstrated a marked downward trajectory. Beginning at 11.80% in 2021, it decreased to 4.40% in 2022, and continued to fall, reaching -9.55% in 2024. A slight improvement to -0.13% was observed in 2025, but remained negative overall. This indicates a progressively worsening efficiency in utilizing assets to generate profit.

Financial Leverage

Financial Leverage exhibited an increasing trend from 1.77 in 2021 to 1.98 in 2024. This suggests a greater reliance on debt financing. However, leverage decreased slightly to 1.85 in 2025. While the increase in leverage initially amplified returns when ROA was positive, it exacerbated the negative impact as ROA declined.

Return on Equity (ROE)

ROE mirrored the decline in ROA, experiencing a substantial decrease from 20.83% in 2021 to -18.89% in 2024. The final year showed a slight improvement to -0.23%, but remained significantly negative. The negative ROE in 2024 and 2025 indicates that the company generated insufficient profit relative to shareholder equity.

The interplay between declining asset profitability and increasing financial leverage initially contributed to a lower, but still positive, ROE in 2022. However, as ROA became negative, the increased leverage magnified the losses, resulting in a substantial negative ROE in subsequent years. The slight decrease in leverage in 2025 offered minimal offset to the continued negative ROA.

The disaggregated components of Return on Equity (ROE) reveal a significant shift in performance over the five-year period. Initially, a strong ROE was observed, but subsequent years demonstrate a marked decline, culminating in negative returns. This analysis details the trends in Net Profit Margin, Asset Turnover, and Financial Leverage, and their combined impact on ROE.

Net Profit Margin

The Net Profit Margin experienced a substantial decrease from 25.14% in 2021 to 12.71% in 2022. This decline continued, reaching 3.11% in 2023, before becoming negative in 2024 (-35.32%) and remaining so in 2025 (-0.51%). This indicates a deteriorating ability to translate sales into profit, potentially due to increased costs, pricing pressures, or other operational challenges.

Asset Turnover

Asset Turnover consistently decreased throughout the period, moving from 0.47 in 2021 to 0.25 in 2025. This suggests a growing inefficiency in utilizing assets to generate revenue. The company is generating less revenue for each dollar of assets it holds, which could be attributed to factors such as declining sales, excess capacity, or inefficient asset management.

Financial Leverage

Financial Leverage exhibited a modest increase from 1.77 in 2021 to 1.81 in 2023, then a more pronounced increase to 1.98 in 2024, before decreasing slightly to 1.85 in 2025. This indicates a growing reliance on debt financing. While leverage can amplify returns, it also increases financial risk. The increase in leverage did not translate into improved ROE, suggesting that the benefits of debt financing were offset by declining profitability and asset utilization.

The combined effect of these trends is clearly visible in the ROE. Starting at 20.83% in 2021, ROE fell to 7.90% in 2022, then to 1.60% in 2023. The negative Net Profit Margin in 2024 and 2025 resulted in negative ROE values of -18.89% and -0.23% respectively. The decline in ROE is primarily driven by the significant deterioration in Net Profit Margin, compounded by the decreasing Asset Turnover. While Financial Leverage increased, it was insufficient to counteract the negative impacts of declining profitability and efficiency.

The observed trends suggest a weakening financial performance. Addressing the declining Net Profit Margin and improving Asset Turnover are critical for restoring profitability and enhancing shareholder returns.

The five-component DuPont analysis reveals a significant decline in Return on Equity (ROE) over the observed period. This decrease is attributable to shifts in profitability, efficiency, and financial leverage, partially offset by changes in tax and interest burdens. A detailed examination of each component provides further insight into these dynamics.

Return on Equity (ROE)

ROE experienced a substantial decrease, moving from 20.83% in 2021 to -0.23% in 2025. The most dramatic drop occurred between 2022 and 2023, and continued into negative territory in 2024 and 2025. This indicates a weakening ability to generate profits from shareholder investments.

EBIT Margin

EBIT Margin demonstrated a pronounced downward trend. Starting at 28.22% in 2021, it fell to 3.05% in 2023 before becoming negative in 2024 (-18.27%) and recovering slightly to 4.46% in 2025. This suggests a significant erosion of core operating profitability. The negative margin in 2024 is particularly concerning.

Asset Turnover

Asset Turnover consistently decreased throughout the period, from 0.47 in 2021 to 0.25 in 2025. This indicates a declining efficiency in utilizing assets to generate sales. The company is generating less revenue for each dollar of assets invested.

Financial Leverage

Financial Leverage exhibited a generally increasing trend, rising from 1.77 in 2021 to 1.98 in 2024, before decreasing slightly to 1.85 in 2025. This suggests an increased reliance on debt financing, which amplifies both profits and losses. While leverage initially contributed to ROE, its impact was overwhelmed by declining profitability.

Tax Burden

The Tax Burden fluctuated considerably. It increased from 0.92 in 2021 to 2.18 in 2023, then became negative in 2025 (-0.21). A negative tax burden suggests the realization of tax benefits or losses that offset tax liabilities. The volatility in this component introduces uncertainty to overall profitability.

Interest Burden

Interest Burden decreased from 0.97 in 2021 to 0.47 in 2023, indicating a reduced proportion of earnings allocated to interest expense. However, it increased to 0.54 in 2025. This suggests improved interest expense management initially, followed by a slight increase in interest obligations.

In summary, the decline in ROE is primarily driven by the substantial deterioration in EBIT Margin and the decreasing efficiency reflected in Asset Turnover. While changes in Tax Burden and Interest Burden have some influence, they are secondary to the core operational challenges. The increasing Financial Leverage, while initially potentially beneficial, ultimately exacerbated the negative impact of declining profitability.

The financial performance, as indicated by the two-component disaggregation of Return on Assets (ROA), reveals a significant deterioration over the five-year period. A consistent decline in profitability and efficiency is evident, culminating in a negative ROA in the most recent year.

Net Profit Margin

The Net Profit Margin experienced a substantial decrease from 25.14% in 2021 to -35.32% in 2024, before a slight recovery to -0.51% in 2025. This indicates a rapidly worsening ability to translate sales into profit, ultimately resulting in net losses in 2024. The initial decline from 2021 to 2022 was considerable, and the subsequent years demonstrate a continued struggle to maintain profitability.

Asset Turnover

Asset Turnover exhibited a steady downward trend, decreasing from 0.47 in 2021 to 0.25 in 2025. This suggests a decreasing efficiency in utilizing assets to generate sales. The rate of decline slowed between 2023 and 2024, but continued into 2025, indicating persistent challenges in asset utilization.

Return on Assets (ROA)

Consequently, Return on Assets followed a similar trajectory, declining from 11.80% in 2021 to -9.55% in 2024, and further to -0.13% in 2025. The negative ROA in 2024 and 2025 signifies that the entity is generating insufficient profit relative to its total assets. The decline in ROA directly reflects the combined impact of the decreasing Net Profit Margin and Asset Turnover.

The interplay between declining profitability and asset utilization has had a pronounced negative effect on overall performance. The substantial drop in Net Profit Margin appears to be the primary driver of the ROA decline, although the decreasing Asset Turnover exacerbates the issue. The slight improvement in Net Profit Margin in 2025 was insufficient to offset the continued decline in Asset Turnover and prevent a negative ROA.

The four-component DuPont analysis reveals a significant decline in Return on Assets (ROA) over the observed period. This decline is attributable to shifts in profitability, efficiency, and financial leverage. A detailed examination of the individual components illuminates the key drivers of this trend.

EBIT Margin

The EBIT Margin experienced a substantial decrease from 28.22% in 2021 to 3.05% in 2023. This trend continued into 2024, with the margin becoming negative at -18.27%, before a partial recovery to 4.46% in 2025. This volatility in profitability is a primary contributor to the overall ROA performance.

Asset Turnover

Asset Turnover consistently decreased from 0.47 in 2021 to 0.25 in 2025. This indicates a diminishing ability to generate sales from the company’s asset base, further exacerbating the decline in ROA. The rate of decline appears to be slowing, but remains consistently negative.

Tax Burden

The Tax Burden fluctuated considerably. It increased from 0.92 in 2021 to 2.18 in 2023, suggesting a higher proportion of pre-tax profits retained after tax payments. However, in 2025, the Tax Burden became negative at -0.21, which is unusual and warrants further investigation as it implies a tax benefit exceeding tax expense.

Interest Burden

The Interest Burden decreased from 0.97 in 2021 to 0.47 in 2023, indicating improved capacity to cover interest expenses. It then increased to 0.54 in 2025. While generally positive, the fluctuations suggest changes in the company’s debt levels or interest rates.

The combined effect of declining profitability, decreasing asset utilization, and fluctuating tax and interest burdens resulted in a significant decrease in ROA, from 11.80% in 2021 to -0.13% in 2025. The negative ROA in 2024 and 2025 signals a period of underperformance in generating profits from its assets. The negative EBIT margin in 2024 is a particularly concerning factor, and the subsequent partial recovery in 2025, while positive, does not fully offset the earlier declines.

The financial performance exhibits significant volatility over the observed period. A notable decline in profitability metrics is apparent, particularly from 2022 to 2023 and again from 2023 to 2024, followed by a slight recovery in the most recent year. The interplay between tax and interest burdens, alongside the evolution of the EBIT margin, appears to be a key driver of these fluctuations in net profit margin.

Net Profit Margin

The net profit margin decreased substantially from 25.14% in 2021 to 3.11% in 2023. This decline accelerated in 2024, resulting in a negative margin of -35.32%. A modest recovery to -0.51% is observed in 2025, though the margin remains negative. This suggests increasing pressure on overall profitability.

EBIT Margin

The EBIT margin mirrors the trend in net profit margin, decreasing from 28.22% in 2021 to 3.05% in 2023. The significant drop to -18.27% in 2024 indicates substantial operational challenges. The partial recovery to 4.46% in 2025 suggests some improvement in core business operations, but the level remains considerably lower than in 2021.

Tax Burden

The tax burden initially increased from 0.92 in 2021 to 1.03 in 2022, then rose sharply to 2.18 in 2023. A substantial negative value of -0.21 is recorded in 2025, potentially indicating tax benefits or loss carryforwards impacting the overall tax expense. The fluctuations in tax burden contribute to the volatility observed in the net profit margin.

Interest Burden

The interest burden decreased from 0.97 in 2021 to 0.47 in 2023, potentially reflecting debt reduction or favorable interest rate adjustments. It then increased to 0.54 in 2025. While generally lower than the tax burden, changes in the interest burden also influence the net profit margin, though to a lesser extent.

The combined effect of declining EBIT margins, fluctuating tax burdens, and relatively stable interest burdens has resulted in a significant deterioration in net profitability. The negative net profit margin in 2024 and continued negative value in 2025 warrant further investigation into the underlying causes of operational underperformance and the factors influencing the tax position.