Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Lam Research Corp., profitability ratios
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).
- Gross Profit Margin
- The gross profit margin demonstrated a generally stable pattern with minor fluctuations over the examined periods. It started at 45.15% in mid-2019, experienced slight increases to a peak of 46.53% in mid-2021, followed by a modest decline reaching 44.62% in mid-2023, before increasing again to 47.32% by mid-2024. This trend indicates resilience in core profitability with a recent improvement.
- Operating Profit Margin
- The operating profit margin showed an overall upward trend from 25.53% in 2019 to a peak of 31.24% in 2022, suggesting enhanced operational efficiency or better control over operating expenses during this period. However, after 2022, there was a decline to 28.61% by 2024, which may reflect increased costs or competitive pressures impacting operating results.
- Net Profit Margin
- The net profit margin followed a similar pattern to the operating margin, rising from 22.7% in 2019 to 26.73% by 2022, indicating stronger bottom-line profitability. This was followed by a slight decrease, settling at 25.68% in 2024. The net margin remains robust, although some pressures have slightly compressed profitability after 2022.
- Return on Equity (ROE)
- Return on equity experienced significant volatility, beginning at 46.89% in 2019 and declining to 43.53% in 2020. It then sharply increased to a peak of 73.35% in 2022, suggesting a period of high financial leverage or exceptional profitability. However, this was followed by a marked decline to 44.82% in 2024, indicating a return to more normalized equity returns and possibly a reduction in leverage or profitability challenges.
- Return on Assets (ROA)
- The return on assets showed an overall rising trend from 18.26% in 2019 to 26.78% in 2022, highlighting increased efficiency in asset utilization. Following this peak, ROA declined to 20.42% in 2024, which points to reduced asset profitability or increased asset base without proportionate earnings growth.
Return on Sales
Return on Investment
Gross Profit Margin
Lam Research Corp., gross profit margin calculation, comparison to benchmarks
| Jun 30, 2024 | Jun 25, 2023 | Jun 26, 2022 | Jun 27, 2021 | Jun 28, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Gross margin | 7,052,791) | 7,776,925) | 7,871,807) | 6,805,306) | 4,608,693) | 4,358,459) | |
| Revenue | 14,905,386) | 17,428,516) | 17,227,039) | 14,626,150) | 10,044,736) | 9,653,559) | |
| Profitability Ratio | |||||||
| Gross profit margin1 | 47.32% | 44.62% | 45.69% | 46.53% | 45.88% | 45.15% | |
| Benchmarks | |||||||
| Gross Profit Margin, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 49.35% | 46.12% | 44.93% | 48.25% | 44.53% | — | |
| Analog Devices Inc. | 57.08% | 64.01% | 62.70% | 61.83% | 65.87% | 67.00% | |
| Applied Materials Inc. | 47.46% | 46.70% | 46.51% | 47.32% | 44.72% | 43.72% | |
| Broadcom Inc. | 63.03% | 68.93% | 66.55% | 61.36% | 56.58% | 55.24% | |
| Intel Corp. | 32.66% | 40.04% | 42.61% | 55.45% | 56.01% | — | |
| KLA Corp. | 59.97% | 59.81% | 61.00% | 59.93% | 57.81% | 59.08% | |
| Micron Technology Inc. | 22.35% | -9.11% | 45.18% | 37.62% | 30.57% | 45.72% | |
| NVIDIA Corp. | 72.72% | 56.93% | 64.93% | 62.34% | 61.99% | — | |
| Qualcomm Inc. | 56.21% | 55.70% | 57.84% | 57.51% | 60.67% | 64.57% | |
| Texas Instruments Inc. | 58.14% | 62.90% | 68.76% | 67.47% | 64.10% | — | |
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Gross profit margin = 100 × Gross margin ÷ Revenue
= 100 × 7,052,791 ÷ 14,905,386 = 47.32%
2 Click competitor name to see calculations.
- Revenue Trends
- Revenue showed a consistent upward trajectory from June 30, 2019, to June 25, 2023, increasing from approximately 9.65 billion US dollars to about 17.43 billion US dollars. However, in the latest period ending June 30, 2024, revenue declined to approximately 14.91 billion US dollars, indicating a significant reduction after several years of growth.
- Gross Margin Analysis
- Gross margin paralleled the revenue trend, rising steadily from around 4.36 billion US dollars in mid-2019 to a peak of approximately 7.87 billion US dollars in mid-2022. A slight decrease occurred in the following year, falling to 7.78 billion US dollars, followed by a more pronounced decline to about 7.05 billion US dollars in the most recent period.
- Gross Profit Margin Percentage
- The gross profit margin percentage showed moderate variability, starting at 45.15% in 2019 and gradually increasing to 46.53% by 2021. It then experienced a minor decrease to 45.69% in 2022 and further declined to 44.62% in 2023. Notably, the margin percentage rebounded in 2024 to 47.32%, reaching the highest level observed within the six-year span.
- Insights into Financial Performance
- The data suggests robust revenue and gross margin growth between 2019 and 2023, reflecting expanding sales and effective cost management. The decline in revenue and gross margin in 2024 points to potential challenges such as market contraction or operational difficulties. However, the improvement in gross profit margin percentage during the same period may indicate enhanced efficiency or pricing strategies mitigating some negative revenue impacts.
Operating Profit Margin
Lam Research Corp., operating profit margin calculation, comparison to benchmarks
| Jun 30, 2024 | Jun 25, 2023 | Jun 26, 2022 | Jun 27, 2021 | Jun 28, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Operating income | 4,263,913) | 5,174,860) | 5,381,822) | 4,482,023) | 2,673,802) | 2,464,732) | |
| Revenue | 14,905,386) | 17,428,516) | 17,227,039) | 14,626,150) | 10,044,736) | 9,653,559) | |
| Profitability Ratio | |||||||
| Operating profit margin1 | 28.61% | 29.69% | 31.24% | 30.64% | 26.62% | 25.53% | |
| Benchmarks | |||||||
| Operating Profit Margin, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 7.37% | 1.77% | 5.36% | 22.20% | 14.02% | — | |
| Analog Devices Inc. | 21.56% | 31.07% | 27.29% | 23.12% | 26.74% | 28.55% | |
| Applied Materials Inc. | 28.95% | 28.86% | 30.20% | 29.87% | 25.37% | 22.93% | |
| Broadcom Inc. | 26.10% | 45.25% | 42.84% | 31.03% | 16.80% | 15.24% | |
| Intel Corp. | -21.99% | 0.17% | 3.70% | 24.62% | 30.41% | — | |
| KLA Corp. | 34.10% | 38.06% | 39.67% | 35.97% | 25.87% | 30.41% | |
| Micron Technology Inc. | 5.19% | -36.97% | 31.54% | 22.68% | 14.01% | 31.51% | |
| NVIDIA Corp. | 54.12% | 15.66% | 37.31% | 27.18% | 26.07% | — | |
| Qualcomm Inc. | 25.85% | 21.74% | 35.88% | 29.16% | 26.58% | 31.59% | |
| Texas Instruments Inc. | 34.94% | 41.85% | 50.63% | 48.84% | 40.76% | — | |
| Operating Profit Margin, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 21.36% | 18.50% | 27.34% | 28.30% | 25.89% | — | |
| Operating Profit Margin, Industry | |||||||
| Information Technology | 26.62% | 24.49% | 26.43% | 26.73% | 22.69% | — | |
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Operating profit margin = 100 × Operating income ÷ Revenue
= 100 × 4,263,913 ÷ 14,905,386 = 28.61%
2 Click competitor name to see calculations.
- Operating Income
- Operating income demonstrated an overall upward trend from 2019 through 2022, increasing steadily from approximately 2.46 billion to 5.38 billion US dollars. However, in the most recent two years, a decline is observed, with operating income decreasing to about 5.17 billion in 2023 and further dropping to 4.26 billion in 2024.
- Revenue
- Revenue exhibited significant growth between 2019 and 2023, rising from roughly 9.65 billion to 17.43 billion US dollars. This growth peaked in 2023, followed by a notable decline in 2024 to approximately 14.91 billion, indicating a contraction in sales or market conditions impacting top-line performance in the latest period.
- Operating Profit Margin
- The operating profit margin showed a generally positive trajectory from 25.53% in 2019 to a high of 31.24% in 2022. After reaching this peak, the margin experienced a gradual decrease to 29.69% in 2023 and further to 28.61% in 2024. Despite the decline, the margin in 2024 remains above the initial 2019 level, suggesting that profitability relative to revenue stays comparatively strong even with recent downturns in income and revenue.
- Summary of Trends
- Both operating income and revenue grew significantly over the initial four-year period, reflecting expanding operational scale and market presence. The subsequent two years saw declines in both metrics, suggesting emerging challenges such as market saturation, increased costs, or external economic factors. The operating profit margin, while declining after 2022, indicates maintained operational efficiency. This combined analysis highlights a phase of robust growth followed by a contraction phase, with profitability metrics showing resilience despite reduced revenue and income figures.
Net Profit Margin
Lam Research Corp., net profit margin calculation, comparison to benchmarks
| Jun 30, 2024 | Jun 25, 2023 | Jun 26, 2022 | Jun 27, 2021 | Jun 28, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income | 3,827,772) | 4,510,931) | 4,605,286) | 3,908,458) | 2,251,753) | 2,191,430) | |
| Revenue | 14,905,386) | 17,428,516) | 17,227,039) | 14,626,150) | 10,044,736) | 9,653,559) | |
| Profitability Ratio | |||||||
| Net profit margin1 | 25.68% | 25.88% | 26.73% | 26.72% | 22.42% | 22.70% | |
| Benchmarks | |||||||
| Net Profit Margin, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 6.36% | 3.77% | 5.59% | 19.24% | 25.50% | — | |
| Analog Devices Inc. | 17.35% | 26.94% | 22.88% | 19.00% | 21.79% | 22.75% | |
| Applied Materials Inc. | 26.41% | 25.86% | 25.31% | 25.53% | 21.04% | 18.52% | |
| Broadcom Inc. | 11.43% | 39.31% | 34.62% | 24.54% | 12.39% | 12.05% | |
| Intel Corp. | -35.32% | 3.11% | 12.71% | 25.14% | 26.84% | — | |
| KLA Corp. | 28.15% | 32.27% | 36.06% | 30.04% | 20.96% | 25.73% | |
| Micron Technology Inc. | 3.10% | -37.54% | 28.24% | 21.16% | 12.54% | 26.97% | |
| NVIDIA Corp. | 48.85% | 16.19% | 36.23% | 25.98% | 25.61% | — | |
| Qualcomm Inc. | 26.03% | 20.19% | 29.27% | 26.94% | 22.09% | 18.07% | |
| Texas Instruments Inc. | 30.68% | 37.16% | 43.68% | 42.35% | 38.69% | — | |
| Net Profit Margin, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 14.94% | 17.06% | 25.54% | 25.83% | 23.10% | — | |
| Net Profit Margin, Industry | |||||||
| Information Technology | 20.64% | 20.39% | 22.45% | 23.62% | 19.67% | — | |
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Net profit margin = 100 × Net income ÷ Revenue
= 100 × 3,827,772 ÷ 14,905,386 = 25.68%
2 Click competitor name to see calculations.
- Revenue Trend
- The revenue exhibited steady growth from 9,653,559 thousand USD in mid-2019 to a peak of 17,428,516 thousand USD in mid-2023. This represents an overall significant increase over the period. However, in mid-2024 revenue declined notably to 14,905,386 thousand USD, indicating a reversal of the prior upward trend.
- Net Income Trend
- Net income increased from 2,191,430 thousand USD in mid-2019 to a high of 4,605,286 thousand USD by mid-2022, showing substantial profitability growth. Subsequently, net income decreased in the following years to 3,827,772 thousand USD by mid-2024, mirroring the decline in revenue during the same period.
- Net Profit Margin Analysis
- The net profit margin remained relatively stable with a slight upward trend initially, moving from 22.7% in mid-2019 to a peak of 26.73% in mid-2022. Thereafter, it experienced a gradual decline to 25.68% by mid-2024, suggesting modest erosion in profitability relative to revenue despite still maintaining a strong margin above 25%.
- Overall Financial Performance
- The data reveal significant growth in both revenue and net income through mid-2022, supported by improving net profit margins. The subsequent decline in revenue and net income through mid-2024 highlights emerging challenges or market conditions impacting the company’s financial performance. Despite reduced absolute earnings, the company has maintained a relatively high and stable profitability margin, reflecting ongoing operational efficiency.
Return on Equity (ROE)
Lam Research Corp., ROE calculation, comparison to benchmarks
| Jun 30, 2024 | Jun 25, 2023 | Jun 26, 2022 | Jun 27, 2021 | Jun 28, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income | 3,827,772) | 4,510,931) | 4,605,286) | 3,908,458) | 2,251,753) | 2,191,430) | |
| Stockholders’ equity | 8,539,454) | 8,210,172) | 6,278,366) | 6,027,188) | 5,172,494) | 4,673,865) | |
| Profitability Ratio | |||||||
| ROE1 | 44.82% | 54.94% | 73.35% | 64.85% | 43.53% | 46.89% | |
| Benchmarks | |||||||
| ROE, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 2.85% | 1.53% | 2.41% | 42.18% | 42.66% | — | |
| Analog Devices Inc. | 4.65% | 9.32% | 7.54% | 3.66% | 10.17% | 11.64% | |
| Applied Materials Inc. | 37.77% | 41.94% | 53.51% | 48.08% | 34.21% | 32.94% | |
| Broadcom Inc. | 8.71% | 58.70% | 50.62% | 26.99% | 12.40% | 10.92% | |
| Intel Corp. | -18.89% | 1.60% | 7.90% | 20.83% | 25.79% | — | |
| KLA Corp. | 82.00% | 116.01% | 237.04% | 61.53% | 45.65% | 44.21% | |
| Micron Technology Inc. | 1.72% | -13.22% | 17.41% | 13.34% | 6.89% | 17.59% | |
| NVIDIA Corp. | 69.24% | 19.76% | 36.65% | 25.64% | 22.91% | — | |
| Qualcomm Inc. | 38.60% | 33.51% | 71.81% | 90.88% | 85.54% | 89.35% | |
| Texas Instruments Inc. | 28.39% | 38.53% | 60.02% | 58.27% | 60.90% | — | |
| ROE, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 11.77% | 13.30% | 22.70% | 25.79% | 24.53% | — | |
| ROE, Industry | |||||||
| Information Technology | 29.37% | 32.00% | 39.15% | 42.48% | 35.75% | — | |
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 3,827,772 ÷ 8,539,454 = 44.82%
2 Click competitor name to see calculations.
The financial data over the six-year period reveals notable trends in profitability, equity base, and return efficiency.
- Net Income
- The net income showed an overall increasing trend from 2019 to 2022, rising from approximately 2.19 billion USD to 4.61 billion USD. However, after reaching the peak in 2022, net income declined in the subsequent years, falling to roughly 4.51 billion USD in 2023 and then further decreasing to about 3.83 billion USD in 2024. This pattern suggests that while the company experienced strong earnings growth in the early years, it faced profitability pressure or other factors that caused a reduction in net income during the latest reported years.
- Stockholders’ Equity
- Stockholders’ equity increased consistently across the entire period, moving from about 4.67 billion USD in 2019 to around 8.54 billion USD in 2024. The most pronounced growth occurred between 2022 and 2023, indicating significant capital accumulation or retained earnings enhancement during these years. This upward trajectory in equity signals strengthening financial foundation and possible reinvestment of earnings or capital infusion.
- Return on Equity (ROE)
- The return on equity exhibited considerable fluctuation. Beginning at 46.89% in 2019, ROE slightly declined in 2020 but surged to a maximum of 73.35% in 2022. Thereafter, ROE decreased over the last two years, settling at 44.82% in 2024. The high ROE in 2021 and 2022 reflects exceptional efficiency in generating profits from shareholders' equity during that period. The subsequent decline may be attributed to the reduction in net income despite the continued increase in equity, indicating a moderation in profitability relative to the equity base.
Overall, the data indicate that while the company expanded its equity base robustly and achieved outstanding profitability and returns on equity in the early part of the period, recent years have experienced a decline in net income and ROE. This could point to emerging challenges affecting profitability or a shift in the company's financial dynamics. Nonetheless, the continued growth in equity underscores a solid financial position moving forward.
Return on Assets (ROA)
Lam Research Corp., ROA calculation, comparison to benchmarks
| Jun 30, 2024 | Jun 25, 2023 | Jun 26, 2022 | Jun 27, 2021 | Jun 28, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income | 3,827,772) | 4,510,931) | 4,605,286) | 3,908,458) | 2,251,753) | 2,191,430) | |
| Total assets | 18,744,728) | 18,781,643) | 17,195,632) | 15,892,152) | 14,559,047) | 12,001,333) | |
| Profitability Ratio | |||||||
| ROA1 | 20.42% | 24.02% | 26.78% | 24.59% | 15.47% | 18.26% | |
| Benchmarks | |||||||
| ROA, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 2.37% | 1.26% | 1.95% | 25.46% | 27.78% | — | |
| Analog Devices Inc. | 3.39% | 6.79% | 5.46% | 2.66% | 5.69% | 6.37% | |
| Applied Materials Inc. | 20.86% | 22.31% | 24.41% | 22.80% | 16.19% | 14.22% | |
| Broadcom Inc. | 3.56% | 19.33% | 15.69% | 8.91% | 3.90% | 4.04% | |
| Intel Corp. | -9.55% | 0.88% | 4.40% | 11.80% | 13.65% | — | |
| KLA Corp. | 17.90% | 24.07% | 26.37% | 20.23% | 13.11% | 13.05% | |
| Micron Technology Inc. | 1.12% | -9.08% | 13.11% | 9.96% | 5.01% | 12.91% | |
| NVIDIA Corp. | 45.28% | 10.61% | 22.07% | 15.05% | 16.15% | — | |
| Qualcomm Inc. | 18.39% | 14.17% | 26.39% | 21.93% | 14.60% | 13.31% | |
| Texas Instruments Inc. | 13.51% | 20.12% | 32.16% | 31.48% | 28.91% | — | |
| ROA, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 6.42% | 7.41% | 12.68% | 13.62% | 11.80% | — | |
| ROA, Industry | |||||||
| Information Technology | 11.95% | 12.52% | 14.57% | 14.67% | 11.45% | — | |
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × 3,827,772 ÷ 18,744,728 = 20.42%
2 Click competitor name to see calculations.
- Net Income
- The net income exhibits a general upward trend from 2019 through 2022, increasing from approximately 2.19 billion USD in 2019 to a peak of about 4.61 billion USD in 2022. However, this peak is followed by a decline in the subsequent years, with net income falling to approximately 4.51 billion USD in 2023 and further decreasing to around 3.83 billion USD in 2024. This indicates a possible slowdown or challenges faced by the company in the most recent periods despite earlier growth.
- Total Assets
- Total assets consistently increased over the entire period, growing from about 12.0 billion USD in 2019 to nearly 18.8 billion USD in 2023, before slightly decreasing to approximately 18.7 billion USD in 2024. The steady asset growth suggests ongoing investments or accumulation of resources, although the slight decline in 2024 may reflect divestitures or asset revaluation.
- Return on Assets (ROA)
- ROA shows variability throughout the years, starting at 18.26% in 2019 and decreasing to 15.47% in 2020. Thereafter, ROA improves significantly, reaching a peak of 26.78% in 2022. Following this, the ratio declines to 24.02% in 2023 and further to 20.42% in 2024. The fluctuations in ROA, coupled with the net income pattern, imply changing efficiency in utilizing assets to generate profit, with recent years indicating a reduction in profitability relative to asset base.