Micron Technology Inc. (NASDAQ:MU)

The financial data reveals fluctuating trends for the company's profitability and leverage over the six-year period.

Return on Assets (ROA)

ROA exhibited volatility, beginning at a high of 12.91% in 2019, decreasing significantly to 5.01% in 2020, then rebounding to 13.11% by 2022. However, there was a sharp decline in 2023, with ROA turning negative at -9.08%, and a slight recovery to 1.12% in 2024. This indicates challenges in asset utilization during the latest periods, particularly in 2023.

Financial Leverage

Financial leverage has shown a gradual upward trend, beginning at 1.36 in 2019 and increasing to 1.54 by 2024. The incremental rise suggests a growing reliance on debt or liabilities to finance assets, which may impact the company's risk profile.

Return on Equity (ROE)

ROE trends correlate closely with ROA, starting at 17.59% in 2019, dropping significantly to 6.89% in 2020, and recovering to a peak of 17.41% in 2022. Subsequently, ROE plunged to a negative -13.22% in 2023 before slightly improving to 1.72% in 2024. The negative ROE in 2023 signals a considerable loss relative to shareholders' equity during that year, aligning with the decline in asset profitability and increase in financial leverage.

Overall, the data indicates a period of financial stress around 2023, marked by deteriorating profitability on both assets and equity, alongside an increase in financial leverage. Although there are signs of recovery in 2024, profitability remains below earlier peak levels, suggesting ongoing challenges in effectively managing assets and equity returns relative to the company's capital structure.

The analysis of the annual financial data reveals several notable trends in key performance ratios over the six-year period.

Net Profit Margin

The net profit margin shows considerable fluctuation over the years. It started at a relatively strong 26.97% in 2019, dropped sharply to 12.54% in 2020, then recovered to above 20% in 2021 and peaked at 28.24% in 2022. However, a significant reversal occurred in 2023 with a negative margin of -37.54%, indicating a substantial loss that year. The margin slightly improved in 2024 but remained modest at 3.1%, suggesting ongoing challenges in profitability.

Asset Turnover

Asset turnover remained relatively stable from 2019 to 2022, hovering in the range of 0.40 to 0.48. In 2023, there was a marked decline to 0.24, indicating reduced efficiency in utilizing assets to generate revenue. A partial recovery occurred in 2024, with the ratio increasing to 0.36, but still below the levels observed in the earlier years.

Financial Leverage

Financial leverage has shown a slow but steady increase throughout the period. Starting at 1.36 in 2019, it rose gradually to 1.38 in 2020, dipped slightly to around 1.33-1.34 in 2021 and 2022, then increased more noticeably to 1.46 in 2023 and further to 1.54 in 2024. This trend suggests a growing reliance on debt or borrowed funds to finance assets.

Return on Equity (ROE)

ROE trends mirror those of net profit margin closely. Initially strong at 17.59% in 2019, it declined sharply to 6.89% in 2020, rebounded to 13.34% in 2021 and further to 17.41% in 2022. However, 2023 saw a significant negative turnaround to -13.22%, consistent with the profitability issues implied by the net profit margin. The 2024 figure shows recovery to 1.72%, yet remains well below historical highs, indicating challenges in generating returns for equity holders.

Overall, the data reflects a period of profitability and operational efficiency stability up to 2022, followed by a severe downturn in 2023 across profitability, efficiency, and shareholder returns. Although some recovery is evident in 2024, performance remains subdued, and the increase in financial leverage may imply higher financial risk going forward.

Tax Burden

The tax burden ratio remained relatively stable around 0.9 to 0.94 from 2019 through 2022, indicating a consistent proportion of pre-tax income retained after taxes. However, a significant decrease to 0.63 in 2024 suggests a notably increased tax expense or lower earnings before tax during this period.

Interest Burden

The interest burden ratio showed minor fluctuations between 0.94 and 0.98 from 2019 to 2022, reflecting steady interest expense relative to earnings before interest and taxes. A sharp decline to 0.69 in 2024 indicates a higher interest expense burden, impacting profitability.

EBIT Margin

Operating profitability experienced considerable volatility. The EBIT margin started at a strong 30.48% in 2019, dropped substantially to 14.75% in 2020, and then recovered to 23.24% and 31.74% in 2021 and 2022 respectively. In 2023, the margin turned deeply negative at -33.9%, indicating a significant operating loss, before partially recovering to a modest 7.13% in 2024.

Asset Turnover

Asset efficiency remained fairly stable between 0.40 and 0.48 from 2019 to 2022, suggesting consistent revenue generation from assets. A marked decline to 0.24 in 2023 implies reduced asset utilization efficiency, with a partial rebound to 0.36 in 2024.

Financial Leverage

Financial leverage remained fairly steady around 1.33 to 1.38 through 2019 to 2022 but increased to 1.46 in 2023 and further to 1.54 in 2024. This indicates greater reliance on debt or other liabilities relative to equity in recent years.

Return on Equity (ROE)

ROE trends closely mirror operating and financial performance trends. It declined from a robust 17.59% in 2019 to a low of 6.89% in 2020, then partially recovered to 13.34% and 17.41% by 2021 and 2022. However, 2023 experienced a significant negative ROE of -13.22%, a reflection of operational losses and increased leverage impact. In 2024, ROE improved slightly to 1.72% but remained very low compared to earlier years.

Net Profit Margin

The net profit margin exhibited notable fluctuations over the period. It started at a relatively high level of 26.97% in 2019, then declined sharply to 12.54% in 2020. It recovered somewhat in 2021 and 2022, reaching 21.16% and 28.24% respectively. However, a significant downturn occurred in 2023, with the margin reducing to -37.54%, reflecting a period of considerable losses. In 2024, a partial recovery is evident, with the margin improving to 3.1%, though this remains well below earlier levels.

Asset Turnover

Asset turnover showed a downward trend over the period analyzed. Beginning at 0.48 in 2019, the ratio decreased to 0.40 in 2020, improved slightly to 0.47 in 2021, and remained relatively stable at 0.46 in 2022. From 2022 onwards, however, a pronounced decline is seen, reaching 0.24 in 2023 before a moderate increase to 0.36 in 2024. This pattern indicates reduced efficiency in using assets to generate sales, particularly in the recent years.

Return on Assets (ROA)

Return on assets demonstrated a trajectory broadly consistent with the net profit margin, though with less extreme values. ROA declined from 12.91% in 2019 to 5.01% in 2020, then rebounded to 9.96% in 2021 and further to 13.11% in 2022. A sharp negative value emerged in 2023, with ROA at -9.08%, indicating a period where asset use yielded losses. In 2024, there is a slight positive recovery to 1.12%, yet the figure remains significantly lower than the pre-2023 period.

Tax Burden

The tax burden ratio remained relatively stable from 2019 to 2022, fluctuating slightly between 0.9 and 0.94, indicating consistent post-tax profitability relative to pre-tax earnings. However, there is a significant decline noted in 2024, where the ratio drops sharply to 0.63, suggesting a substantial increase in tax expenses or reduced taxable income in the most recent period.

Interest Burden

The interest burden ratio experienced minor fluctuations between 0.94 and 0.98 from 2019 through 2022, reflecting stable earnings before interest and taxes relative to earnings before taxes. In 2024, this ratio plunges to 0.69, indicating increased interest expenses relative to earnings before interest and taxes, adversely impacting profitability.

EBIT Margin

The EBIT margin shows marked volatility over the analyzed periods. It declined sharply from 30.48% in 2019 to a low of 14.75% in 2020 but then recovered to 31.74% by 2022, reflecting improved operational efficiency or cost management. However, the margin deteriorated drastically in 2023 to a negative 33.9%, indicating operational losses during that year. A partial recovery is seen in 2024 with a positive EBIT margin of 7.13%, though still significantly below earlier positive levels.

Asset Turnover

The asset turnover ratio remained relatively flat, with minor declines from 0.48 in 2019 to 0.4 in 2020, then returning to around 0.46 in 2022. In 2023, a substantial drop to 0.24 is observed, signaling reduced efficiency in utilizing assets to generate sales. A mild improvement to 0.36 in 2024 suggests some operational enhancement, but asset utilization remains below earlier performance.

Return on Assets (ROA)

The ROA trend mirrors changes in profitability and operational efficiency. Starting at 12.91% in 2019, it declines to 5.01% in 2020, recovers to 13.11% by 2022, and then falls sharply into negative territory at -9.08% in 2023, indicating net losses relative to asset base. There is a marginal positive rebound to 1.12% in 2024, yet this remains far below pre-2023 levels, highlighting ongoing challenges in asset profitability.

Tax Burden

The tax burden ratio demonstrates a generally high level, fluctuating between 0.9 and 0.94 from 2019 to 2022, with a notable decrease to 0.63 in 2024. This indicates an increased proportion of earnings retained after taxes in the earlier years, followed by a significant reduction in the latest fiscal year, suggesting either increased tax expenses or changes in tax strategy or policy.

Interest Burden

The interest burden ratio remained relatively stable from 2019 through 2022, ranging from 0.94 to 0.98, denoting consistent control over interest expenses relative to operating income. However, there is a marked decline to 0.69 in 2024, indicating a substantial increase in interest costs or financial leverage impacting earnings before tax in the latest period.

EBIT Margin

The EBIT margin exhibits significant volatility. After a high of 30.48% in 2019, it declined sharply to 14.75% in 2020, then partially recovered to 31.74% by 2022. A drastic negative swing to -33.9% occurs in 2023, before a modest recovery to 7.13% in 2024. This pattern points to periods of strong profitability interrupted by substantial operational challenges or extraordinary losses in 2023 and a tentative improvement thereafter.

Net Profit Margin

The net profit margin trend mirrors that of EBIT margin, declining from 26.97% in 2019 to 12.54% in 2020, rebounding to 28.24% in 2022, and then plunging sharply to -37.54% in 2023. A recovery to 3.1% in 2024 suggests ongoing financial distress in 2023 was somewhat mitigated, but profitability remains subdued compared to earlier periods. Overall, the margins indicate fluctuations in overall profitability impacted by operational performance and possibly financial and tax-related burdens.