KLA Corp. (NASDAQ:KLAC)

Return on Assets (ROA)

The ROA demonstrates an overall upward trend from September 2020 through June 2022, increasing from approximately 13.85% to around 26.37%. This reflects improving efficiency in asset utilization during this period. However, following the peak in mid-2022, the ROA experiences a notable decline, dropping to about 17.45% by March 2024. After this trough, there is a recovery trend with the ROA rising steadily again towards 25.96% by September 2025, indicating a rebound in asset profitability.

Financial Leverage

Financial leverage ratios initially decrease gradually from 3.39 in September 2020 to 2.89 by September 2021, suggesting a reduction in reliance on debt or other leveraged funding. A sharp and significant spike is observed in June 2022, where the leverage ratio reaches 8.99, more than tripling the prior value. Following this peak, the leverage ratio declines steadily through June 2025, returning to a lower range near 3.27. This pattern points to a period of increased debt or leverage funding usage in mid-2022, followed by deleveraging or reduction in financial risk.

Return on Equity (ROE)

The ROE shows a strong ascending trajectory from September 2020 through June 2022, rising dramatically from approximately 47% to an extremely high level of 237.04%, likely influenced by the leverage spike around the same period. After this peak, the ROE declines markedly, falling to about 82% by June 2024. Despite the decline, ROE remains substantially above the early period values, indicating sustained higher equity profitability. Some fluctuations occur from mid-2024 to September 2025, with ROE maintaining elevated levels in the range of approximately 85% to 92%.

Overall Insights

The analysis reveals a correlation between the leverage and ROE metrics, with both peaking in mid-2022. The pronounced increase in financial leverage corresponds to an extreme rise in ROE, suggesting the company leveraged debt to amplify equity returns during that period. The subsequent reduction in leverage is associated with a decline in ROE, although it remains elevated compared to initial levels. The ROA follows a smoother pattern, showing gradual increase and decline phases, indicating fluctuations in asset efficiency that are less volatile than equity returns. Overall, the financial patterns suggest periods of aggressive leveraging to boost equity returns, followed by normalization phases emphasizing more conservative financial management and gradual recovery in operational profitability.

The analysis of the quarterly financial data reveals several noteworthy trends across the examined periods.

Net Profit Margin

This metric shows a general upward trend from 21.76% at the beginning of the period to a peak around mid-2021 at approximately 36.57%. Following this peak, there is a gradual decline observed through 2023, reaching a low near 27.19%, before it starts to recover steadily towards the end of the data set, finishing at 33.83%. This indicates fluctuations in profitability intensity, with a recent recovery phase evident in the last few quarters.

Asset Turnover

The asset turnover ratio exhibits mild improvements early on, rising from 0.64 to 0.76 over approximately two years, reflecting enhanced efficiency in utilizing assets to generate sales. However, there is a slight dip in the ratio around late 2023 to early 2024, decreasing to around 0.64, followed by a recovery trend up to 0.77 towards the last recorded quarter. This pattern suggests varying effectiveness in asset utilization but with a positive outlook toward recent periods.

Financial Leverage

Financial leverage displays significant volatility throughout the timeline. Initially, leverage decreases gradually from 3.39 to around 2.89 by late 2021, signifying reduced dependency on debt financing. However, a sharp increase occurs in mid-2022, peaking at 8.99, indicating a substantial rise in leverage. Subsequently, leverage declines steadily to 3.27 through the latter part of the data. This sharp fluctuation suggests periods of considerable changes in the company’s capital structure, possibly driven by strategic financial decisions or external factors impacting borrowing.

Return on Equity (ROE)

ROE shows a strong growth trajectory initially, from 46.99% up to an extraordinary peak at 237.04% in mid-2022, closely aligned with the spike in financial leverage. This heightened ROE level tapers down but remains robust, fluctuating between approximately 82% and 92% toward the end of the dataset. The extraordinary peak followed by stabilization indicates the impact of leverage on equity returns as well as a potentially restored balance in financial management practices in the recent periods.

In summary, the financial data depicts a company experiencing phases of increased profitability and efficiency, accompanied by a significant but temporary surge in financial leverage that notably amplified equity returns. The most recent quarters point toward normalization of leverage and sustained profitability, reflecting a potentially balanced financial strategy moving forward.

Tax Burden

The tax burden ratio showed relatively stable behavior with slight fluctuations over the periods. It started around 0.9 in late 2020, peaked briefly above 1.0 in the third quarter of 2021, and then gradually declined and stabilized around 0.87 from late 2022 through mid-2025. This indicates a consistent effective tax rate impacting earnings during the later periods.

Interest Burden

The interest burden ratio exhibited a mild upward trend from 0.9 to about 0.96 during 2020 through mid-2022, indicating improved earnings before interest and taxes relative to operating profit. From late 2022 onward, it fluctuated narrowly around 0.91 to 0.94, reflecting relatively stable interest expenses in relation to earnings over recent quarters.

EBIT Margin

EBIT margin demonstrated a marked increase from approximately 27% in late 2020 to over 40% by late 2022, reaching a peak at around 41% in early 2025. There was a modest decline observed in 2023 to lows near 34%, followed by a consistent uptrend thereafter. This trend signifies strengthening operational profitability over the analyzed period despite periodic softening.

Asset Turnover

The asset turnover ratio gradually increased from 0.64 in late 2020 to peak near 0.78 in early 2023, indicating more efficient utilization of assets to generate sales. Subsequently, it experienced some decline to around 0.64 by mid-2024 but recovered to approximately 0.77 by late 2025, suggesting fluctuating but overall improved asset productivity.

Financial Leverage

Financial leverage was relatively steady between 2.89 and 3.39 up to mid-2022 but exhibited a sharp spike to 8.99 in mid-2022, possibly attributable to increased debt or lower equity. After this peak, leverage gradually declined over the subsequent quarters, falling to approximately 3.27 by late 2025. The substantial temporary increase followed by a steady decrease suggests a phase of balance sheet restructuring or optimization.

Return on Equity (ROE)

ROE showed significant volatility, increasing from about 47% in late 2020 to an extraordinary peak of over 237% mid-2022, coinciding with the sharp rise in financial leverage. Following this apex, ROE trended downward though remaining elevated, stabilizing between 80% and 95% from 2023 onward. The ROE pattern reflects the impact of leverage on shareholder returns, with the peak indicative of heightened financial risk and profitability interplay before moderation.

The financial performance indicators present notable trends over the observed periods. Net profit margin showed a strong upward trajectory from 21.76% in the third quarter of 2020, peaking around 36.57% by the end of 2021. This high margin is maintained close to the mid-30s for the first half of 2022, followed by a gradual decline reaching a low near 27.19% in the first quarter of 2024. Subsequently, a recovery phase is observed with the margin climbing back above 33% by the third quarter of 2025.

Asset turnover demonstrated a moderate but steady increase from 0.64 in late 2020 to approximately 0.78 in the first quarter of 2023. Thereafter, the ratio declined to 0.64 by the first quarter of 2024, then improved again reaching 0.77 by the third quarter of 2025. This indicates fluctuations in the efficiency of asset utilization, with periods of both enhanced and diminished asset productivity.

Return on assets (ROA) closely mirrored the combined effects of changes in profit margin and asset turnover. It rose sharply from 13.85% in the third quarter of 2020 to over 26% by the middle of 2022, evidencing strong operational efficiency and profitability during this period. The subsequent decline dropped ROA to 17.45% in the first quarter of 2024, reflecting the earlier noted dip in both profit margin and asset turnover. From there, ROA experienced a robust rebound, climbing back to nearly 26% by the third quarter of 2025, signaling recovery in overall asset profitability.

Summary of Key Trends

Net profit margin experienced a significant increase through 2021, followed by a decrease and a subsequent partial recovery by 2025.

Asset turnover showed periods of gradual improvement with mid-term declines, indicating variable efficiency in asset use.

Return on assets rose notably through mid-2022, dropped in early 2024, then recovered strongly, reflecting combined movements in profitability and asset utilization.

The interplay between margins and turnover underscores a cyclical performance pattern with phases of expansion and contraction in operating effectiveness.

Tax Burden

The tax burden ratio demonstrates a general decline over the examined periods, starting near 0.9 and exceeding 1.0 briefly around September 2021. Post that peak, the ratio stabilizes primarily in the 0.86 to 0.87 range towards the later periods, indicating a consistent level of tax impact on earnings with slight fluctuations but no significant upward or downward trend.

Interest Burden

Interest burden shows a gradual increase from 0.9 to 0.96 during early periods, peaking around mid-2022, and then a mild decline to approximately 0.91 before rising again to about 0.94 by the latest date. This trend suggests relatively stable interest expenses relative to earnings before interest and taxes (EBIT), with a minor variation but overall steady financial cost management.

EBIT Margin

EBIT margin exhibits a positive upward trajectory across most of the timeline, rising from approximately 27% to over 41% in the final quarter. The margin increases consistently in the early and middle periods, reaching peak efficiency around the end of 2022, followed by a slight decrease in subsequent quarters. However, the margin rebounds in later periods, approaching new highs indicative of improved operational profitability and cost controls.

Asset Turnover

Asset turnover ratio trends upward initially, moving from 0.64 to around 0.78 by the first quarter of 2023, suggesting better utilization of assets to generate sales. Afterward, there is a decline in this ratio reaching a low near 0.64 mid-2024, before recovering again towards 0.77 by the end of the series. This pattern indicates fluctuating but generally improving efficiency in asset use, with intermittent periods of moderate decline.

Return on Assets (ROA)

Return on assets mirrors the combined effect of EBIT margin and asset turnover, beginning at approximately 14% and rising significantly to nearly 26% in early 2022. Following this peak, ROA experiences a decline to around 17% in mid-2024 before gradually climbing back toward 26% by late 2025. This volatility suggests varying degrees of profitability linked to operational and asset efficiency dynamics over time but concludes with strong returns indicative of improved overall asset performance.

The analysis of the financial ratios over the reported quarters reveals several notable trends in the company's profitability and expense management.

Tax Burden

The tax burden ratio exhibits slight fluctuations initially, ranging from 0.88 to 1.03 in the earlier quarters, with a peak at 1.03 around September 2021. Subsequently, it stabilizes at approximately 0.87 from the period starting in September 2023 through to the latest quarter reported in September 2025. This suggests a more consistent and potentially optimized tax expense relative to income in the later periods.

Interest Burden

The interest burden ratio shows a gradual increase from 0.90 in September 2020, peaking at 0.96 in June 2022. After this peak, it exhibits a mild decline and stabilizes around 0.91 to 0.94 in the later quarters. This pattern indicates that although interest expenses slightly increased during the mid-period, they were effectively managed in the following quarters, maintaining a reasonably stable interest expense burden.

EBIT Margin

The EBIT margin demonstrates a clear upward trend from 26.81% in September 2020, reaching a peak around 40.69%–41.25% in the quarters from December 2024 onwards. Despite minor fluctuations, the margin remains elevated in the latter reporting periods, reflecting improved operational efficiency or favorable revenue-cost dynamics contributing to higher earnings before interest and taxes.

Net Profit Margin

The net profit margin shows a significant increase from 21.76% in September 2020, reaching a high point of 36.57% in December 2021. Following this peak, the margin declines somewhat, stabilizing in the range of 27% to 34% through the more recent quarters. Notably, the net profit margin begins to increase again towards the end of the reporting period, hitting 33.83% by September 2025. This pattern may reflect fluctuations in non-operating expenses, taxes, or changes in cost control measures affecting the bottom line.

Overall, the company exhibits improved operational margins and effective management of tax and interest expenses over time, contributing to enhanced profitability. After some variability in the middle periods, particularly concerning the net profit margin, the financial performance shows signs of stabilization and growth in the most recent quarters analyzed.