Keurig Dr Pepper Inc. (NASDAQ:KDP)

Return on Assets (ROA)

The Return on Assets shows a consistent upward trend over the four-year period. Starting at 1.2% in 2018, it more than doubled to 2.53% in 2019, followed by a modest increase to 2.66% in 2020, and then a significant jump to 4.24% in 2021. This pattern indicates improving efficiency in utilizing assets to generate profits, with particularly strong growth in the final period.

Financial Leverage

Financial leverage has gradually declined each year, moving from a ratio of 2.17 in 2018 down to 2.03 by the end of 2021. This steady reduction suggests a deliberate strategy to decrease reliance on debt financing or a change in the capital structure towards equity. The diminishing leverage may also imply a lower financial risk profile for the company over time.

Return on Equity (ROE)

Return on Equity exhibited a pronounced upward trajectory throughout the period. Beginning at 2.6% in 2018, it more than doubled to 5.39% in 2019, with a slight increase to 5.56% in 2020, and then rose markedly to 8.59% in 2021. The growth in ROE outpaces the growth in ROA, which, combined with the decrease in financial leverage, reflects improved profitability and efficient use of shareholders’ equity.

Overall Insights

The company demonstrates improving profitability metrics over the four years, with both ROA and ROE increasing significantly, especially in the final year. The reduction in financial leverage suggests a more conservative financial stance, which, alongside rising returns, may point to enhanced operational effectiveness and financial management. The gap between ROE and ROA, along with decreasing leverage, suggests that improvements in equity returns are driven more by operational performance than by increased financial risk.

Net Profit Margin

The net profit margin displayed a consistent upward trend over the four-year period. Starting at 7.87% in 2018, it increased to 11.28% in 2019 and slightly rose to 11.4% in 2020. The most significant jump occurred in 2021, where the margin reached 16.92%. This indicates growing profitability efficiency in generating profit from revenue.

Asset Turnover

Asset turnover showed a steady increase throughout the period, improving from 0.15 in 2018 to 0.22 in 2019, then 0.23 in 2020, and finally 0.25 in 2021. This suggests a gradual enhancement in the company’s efficiency in using its assets to generate sales revenue.

Financial Leverage

Financial leverage exhibited a slight but consistent decline, moving from a ratio of 2.17 in 2018 down to 2.03 by 2021. This reduction implies a moderate decrease in the use of debt relative to equity over time, potentially indicating a more conservative capital structure.

Return on Equity (ROE)

Return on equity showed a positive trend with gradual improvement. Beginning at 2.6% in 2018, ROE increased to 5.39% in 2019, then to 5.56% in 2020, and notably rose to 8.59% in 2021. The growth in ROE aligns with improvements in profitability and asset efficiency, despite the decrease in financial leverage.

Tax Burden

The tax burden ratio remained relatively stable over the four-year period, with a slight upward trend from 0.74 in 2018 and 2019 to 0.76 in 2020, followed by a slight increase to 0.77 in 2021. This indicates only minor changes in the company's effective tax rate affecting net income.

Interest Burden

There is a noticeable improvement in the interest burden ratio, increasing from 0.64 in 2018 to 0.85 in 2021. This trend suggests the company has become more efficient in managing interest expenses relative to its earnings before interest and taxes, enhancing profitability.

EBIT Margin

The EBIT margin showed a positive upward trend, rising from 16.66% in 2018 to 26.01% in 2021. Despite a slight dip in 2020 to 20.29% from 21.12% in 2019, the overall increase reflects improved operational efficiency and profitability before interest and taxes over the period.

Asset Turnover

The asset turnover ratio increased steadily from 0.15 in 2018 to 0.25 in 2021. This improvement indicates enhanced efficiency in using assets to generate revenue, pointing to stronger asset utilization strategies.

Financial Leverage

Financial leverage exhibited a gradual decline, from 2.17 in 2018 to 2.03 in 2021. This suggests a conservative shift in the company’s capital structure, with a reduction in the reliance on debt financing over time.

Return on Equity (ROE)

Return on equity has shown a consistent upward trajectory, increasing from 2.6% in 2018 to 8.59% in 2021. This significant improvement can be attributed to the combined effects of better profit margins, improved interest management, higher asset turnover, and still moderate financial leverage, leading to enhanced shareholder value.

Net Profit Margin

The net profit margin exhibits a consistent upward trend across the observed periods. Starting at 7.87% in 2018, there is a notable increase to 11.28% in 2019, a slight further rise to 11.4% in 2020, and a more pronounced jump to 16.92% in 2021. This increase indicates improved profitability and efficiency in managing expenses relative to revenue over time.

Asset Turnover

The asset turnover ratio shows a steady improvement over the four years. Beginning at 0.15 in 2018, it rises to 0.22 in 2019, then to 0.23 in 2020, and reaches 0.25 in 2021. This trend suggests enhanced efficiency in utilizing assets to generate sales, though the absolute values remain relatively modest.

Return on Assets (ROA)

Return on assets also demonstrates consistent growth during the period. It starts at a low 1.2% in 2018, more than doubles to 2.53% in 2019, increases slightly to 2.66% in 2020, and then significantly improves to 4.24% in 2021. The ROA progression reflects the combined effect of increasing profit margins and asset turnover, indicating better overall asset utilization to generate profits.

Tax Burden

The tax burden remained relatively stable over the four-year period, showing a slight increase from 0.74 in 2018 and 2019 to 0.76 in 2020, and further to 0.77 in 2021. This indicates a marginally higher proportion of earnings being retained after taxes as time progressed.

Interest Burden

The interest burden showed notable improvement, rising from 0.64 in 2018 to 0.85 in 2021. This upward trend suggests a reduction in interest expenses relative to earnings before interest and taxes, improving the company's capacity to cover interest costs and retain earnings.

EBIT Margin

The EBIT margin experienced an overall upward trajectory, starting at 16.66% in 2018, increasing to a peak of 21.12% in 2019, slightly declining to 20.29% in 2020, and then sharply rising to 26.01% in 2021. This pattern reflects enhanced operational efficiency and profitability over time, particularly notable in the final year.

Asset Turnover

Asset turnover steadily increased from 0.15 in 2018 to 0.25 in 2021. The consistent growth in this ratio indicates improved utilization of assets to generate revenue, signaling greater operational effectiveness in asset management.

Return on Assets (ROA)

The return on assets improved significantly across the period under review, rising from a low 1.2% in 2018 to 4.24% in 2021. This upward trend demonstrates an enhanced ability to generate income from the assets owned, combining gains from both operational efficiency and better financial management.

The financial data reveals significant positive trends in profitability and cost management over the four-year period ending in 2021. Various key ratios indicate improvements in the company's operational and financial efficiency.

Tax Burden

The Tax Burden ratio remained relatively stable, hovering around 0.74 to 0.77 throughout the period. This suggests that the company maintained a consistent effective tax rate, with a slight increase observed in the last year, indicating marginally higher post-tax earnings retention relative to pre-tax profits.

Interest Burden

Interest Burden showed a notable improvement from 0.64 in 2018 to 0.85 in 2021. This upward trend implies a significant decrease in interest expense relative to earnings before interest and taxes, reflecting either reduced debt levels, lower interest rates, or improved earnings sufficiently outpacing interest charges. This improvement enhances overall profitability and financial stability.

EBIT Margin

Operating profitability as measured by the EBIT Margin increased substantially from 16.66% in 2018 to 26.01% in 2021. The margin peaked in 2019 at 21.12%, experienced a slight dip in 2020 to 20.29%, then surged sharply in 2021. This pattern indicates improved operational efficiency and possibly favorable revenue growth or cost control measures, particularly in the most recent year.

Net Profit Margin

The Net Profit Margin exhibited a strong upward trajectory, increasing from 7.87% in 2018 to 16.92% in 2021. This near doubling of profitability net of all expenses shows enhanced bottom-line performance. The margin rose continuously, with notable acceleration in 2021, indicating robust profit growth relative to sales which could be attributed to improved operational margins, better interest burden management, and stable tax burden.

Overall, the data signals considerable financial improvement characterized by rising profitability margins and reduced interest expenses, alongside consistent tax impact. This suggests a favorable evolution in both operational execution and financial management over the analyzed timeframe.