KLA Corp. (NASDAQ:KLAC)

Return on Assets (ROA)

The Return on Assets shows a generally positive trend from 2020 through 2025, starting at 13.11% in 2020 and peaking at 26.37% in 2022. There was a slight decline to 24.07% in 2023, followed by a more noticeable drop to 17.9% in 2024. However, the ROA recovers significantly to 25.28% by 2025. Overall, this indicates that the company has improved its efficiency in generating profits from its assets over the period, with some fluctuations observed mid-term.

Financial Leverage

The Financial Leverage ratio exhibits considerable variability over the years. It starts at 3.48 in 2020 and declines to 3.04 in 2021, suggesting a slight reduction in the use of debt relative to equity. However, in 2022, there is a sharp increase to 8.99, indicating a substantial rise in leverage. This is then followed by a decrease through 2023 to 4.82, continuing down to 4.58 in 2024, and further dropping to 3.42 in 2025. These movements suggest aggressive leverage usage in 2022, which was subsequently scaled back over the following years to more moderate levels.

Return on Equity (ROE)

The Return on Equity shows significant volatility during the period. Starting at 45.65% in 2020, it increases substantially to 61.53% in 2021 and then experiences an exceptional spike to 237.04% in 2022. This peak is followed by a decrease to 116.01% in 2023 and further declines to 82.00% in 2024 and 86.56% in 2025. Despite the fluctuations, the ROE remains at relatively high levels, indicating strong returns for shareholders overall, albeit with heightened variability that could be linked to changes in financial leverage and asset returns.

The financial data exhibits several noteworthy trends across the examined periods. The net profit margin shows an overall upward movement from 20.96% in 2020 to 33.41% in 2025, peaking at 36.06% in 2022 but experiencing some volatility between 2023 and 2024. This suggests generally improving profitability with some fluctuations in operational efficiency or cost management.

Asset turnover demonstrates a gradual increase from 0.63 in 2020 to 0.76 in 2025, with minor deviations. This indicates an improvement in the efficiency with which the company utilizes its assets to generate sales, though the dip to 0.64 in 2024 may reflect a temporary slowdown or asset base expansion without proportionate revenue growth that year.

Financial leverage exhibits considerable variability. It starts at 3.48 in 2020, decreases to 3.04 in 2021, then sharply rises to 8.99 in 2022, before gradually declining to 3.42 by 2025. The significant spike in 2022 suggests a substantial increase in debt or liabilities relative to equity, which may have implications for risk and capital structure management during that period.

Return on equity (ROE) displays a strong but volatile trajectory. It climbs from 45.65% in 2020 to an exceptional 237.04% in 2022, then decreases to 86.56% by 2025. Such extreme fluctuation points to extraordinary financial performance in 2022—likely influenced by the elevated financial leverage—followed by a normalization phase. Despite the decline, ROE remains high, indicating effective use of shareholder equity to generate earnings.

Net Profit Margin

General upward trend with peak profitability in 2022 and some variability afterward.

Asset Turnover

Improvement in asset efficiency over the period with a temporary dip in 2024.

Financial Leverage

Considerable fluctuation, notably a peak in 2022 indicating increased borrowing or risk.

Return on Equity (ROE)

High volatility with extraordinary returns in 2022 aligned with leverage changes, followed by a reduction while remaining robust.

Tax Burden

The tax burden ratio demonstrates a generally stable pattern, fluctuating slightly between 0.87 and 0.95 over the observed periods. It reached a high point of 0.95 in the year ending June 30, 2022, followed by a steady decline to 0.87 in the most recent years, indicating a slight improvement in tax efficiency or reduced tax expenses relative to earnings before tax.

Interest Burden

The interest burden ratio shows minor variability, with values remaining close to one, ranging from 0.89 to 0.96. This suggests consistent interest expense levels relative to earnings before interest and tax, with a small dip in the ratio in 2020 and 2023-2025 and a peak in 2022.

EBIT Margin

The EBIT margin increased significantly from 25.47% in 2020 to a peak of 40.69% by 2025, indicating improving operational profitability. The margin rose sharply between 2020 and 2022, with a gradual dip in 2024, before reaching the highest point in 2025. This upward trend reflects enhanced operational efficiency or favorable market conditions driving earnings before interest and taxes as a percentage of sales.

Asset Turnover

Asset turnover reflects how efficiently the company uses its assets to generate sales. There is an overall increasing trend, moving from 0.63 in 2020 to 0.76 in 2025, despite a dip to 0.64 in 2024. The improvement suggests enhanced asset utilization or revenue growth relative to asset base, although the temporary decline in 2024 may indicate some operational or investment fluctuations during that period.

Financial Leverage

Financial leverage exhibits significant volatility across the years. Starting at 3.48 in 2020, it dropped to 3.04 in 2021, then surged markedly to 8.99 in 2022. Afterward, it steadily decreased to 3.42 by 2025. The large spike in 2022 suggests increased reliance on debt or other liabilities relative to equity that year, which later normalized. This fluctuation could imply changes in capital structure or financing strategy over time.

Return on Equity (ROE)

ROE shows a highly volatile but generally upward trend until 2022, reaching an exceptional peak of 237.04%, followed by a sharp decline but sustained high returns of 82% to 86.56% in the latest periods. The enormous spike in 2022 aligns with the surge in financial leverage, hinting that leverage significantly amplified returns on equity that year. Despite the decrease post-2022, the ROE remains substantially elevated, indicating strong profitability relative to shareholders' equity, though accompanied by elevated financial risk.

Summary

Overall, the financial data reflects increasing operational profitability and improved asset efficiency, as evidenced by rising EBIT margin and asset turnover. The company's capital structure experienced pronounced shifts, with financial leverage peaking dramatically in 2022 and then retreating to more moderate levels. This leverage variation appears to have had a substantial impact on ROE, causing extreme fluctuations. Tax and interest burdens remained relatively stable, suggesting consistent cost management in these areas. The interplay of these factors indicates a dynamic financial environment, with profitability enhancements supported by operational gains and leveraged financing strategies.

Net Profit Margin

The net profit margin exhibited an overall upward trend from 20.96% in 2020 to a peak of 36.06% in 2022, indicating improving profitability efficiency during this period. However, a noticeable decline followed, dropping to 28.15% in 2024 before recovering again to 33.41% in 2025. This pattern suggests fluctuations in cost management or pricing power, with the margin remaining relatively strong despite the interim dip.

Asset Turnover

The asset turnover ratio demonstrated gradual improvement from 0.63 in 2020 to 0.75 by 2023, reflecting increasing efficiency in utilizing assets to generate revenue. There was a moderate decrease to 0.64 in 2024, which was then reversed by a rise to 0.76 in 2025. The volatility in recent years may imply changes in asset base or revenue generation dynamics, but the longer-term trend indicates enhanced asset utilization.

Return on Assets (ROA)

Return on assets mirrored the patterns seen in profitability and turnover, starting at 13.11% in 2020 and reaching a high of 26.37% in 2022. After a slight decline to 17.9% in 2024, it rebounded to 25.28% in 2025. This series of fluctuations suggests variations in overall operational effectiveness and profitability relative to the asset base, with the company maintaining a generally strong capacity to generate returns from its assets over the period observed.

Overall Analysis

The financial ratios collectively indicate a company experiencing growth in profitability and efficiency through mid-period years, followed by some cyclical or operational challenges around 2024. The subsequent recovery in 2025 demonstrates resilience and an ability to improve through adjustments. The alignment between the trends in net profit margin, asset turnover, and ROA confirms the interconnectedness of profitability, asset management, and returns.

Tax Burden

The tax burden ratio displays fluctuating behavior over the analyzed periods. It declined notably between 2020 and 2021 from 0.92 to 0.88, then rose to 0.95 in 2022 before returning to lower values of 0.89 in 2023 and stabilizing at 0.87 in the last two years. This trend suggests variability in tax expenses relative to pretax earnings, with a slight improvement in tax efficiency in recent years.

Interest Burden

Interest burden shows a general improvement trend, increasing from 0.89 in 2020 to 0.94 by 2025, with a peak of 0.96 in 2022. The overall increase in this ratio indicates more favorable interest expenses relative to earnings before interest and taxes, implying better control over interest costs or reduced debt burden over time.

EBIT Margin

The EBIT margin exhibits strong growth from 25.47% in 2020, climbing sharply to 36.40% in 2021 and reaching 39.62% in 2022. It shows slight fluctuations thereafter, slightly declining to 35.68% in 2024 before improving again to 40.69% in 2025. This pattern reflects robust profitability from core operations with some volatility but an overall strong margin profile.

Asset Turnover

Asset turnover ratio generally increases from 0.63 in 2020 to a peak of 0.76 in 2023 and 2025, indicating improved efficiency in using assets to generate sales. However, there is a dip in 2024 to 0.64, suggesting a temporary decline in operational efficiency during that period.

Return on Assets (ROA)

The ROA ratio mirrors the trends observed in EBIT margin and asset turnover, showing substantial growth from 13.11% in 2020 to a peak of 26.37% in 2022. Following a decline to 17.90% in 2024, it rebounds strongly to 25.28% in 2025. This variability signifies fluctuating overall profitability that remains high, with notable recovery after a temporary downturn in 2024.

Tax Burden Ratio

The tax burden ratio exhibits slight fluctuations over the years, starting at 0.92 in mid-2020 and experiencing a decline to 0.88 by mid-2021. It then peaks at 0.95 in mid-2022 before decreasing again to 0.87 in mid-2024 and maintaining that level into mid-2025. This pattern indicates some variability in the effective tax rate, with a general trend towards a lower tax burden after 2022.

Interest Burden Ratio

The interest burden ratio shows a general improvement from 0.89 in mid-2020 to a peak of 0.96 in mid-2022, suggesting a reduction in interest expenses relative to earnings before interest and taxes. However, it declines slightly to 0.91 in mid-2024 before recovering to 0.94 in mid-2025, indicating some variability but overall maintaining a relatively favorable interest burden.

EBIT Margin

The EBIT margin demonstrates a strong upward trend from 25.47% in mid-2020 to a high of 40.69% in mid-2025. There is steady growth through mid-2022, with a mild decline in mid-2024, but the margin recovers and reaches its highest point in the most recent period. This suggests improving operational efficiency and profitability before interest and taxes over the timeframe.

Net Profit Margin

The net profit margin likewise shows significant growth, rising from 20.96% in mid-2020 to a peak of 36.06% in mid-2022. Following this peak, the margin declines to 28.15% by mid-2024 but improves again to 33.41% in mid-2025. Despite some volatility, the overall trend indicates enhanced profitability on a net basis, reflective of both operational improvements and effective cost management.