PepsiCo Inc. (NASDAQ:PEP)

The analysis of key financial ratios over the presented quarterly periods reveals several notable trends in company performance.

Return on Assets (ROA)

The ROA showed a relatively stable pattern with some fluctuations across the timeframe. Starting at 8.22% at the beginning of 2021, it increased to peak levels above 10% during early 2022, indicating improved efficiency in using assets to generate earnings during this period. However, after this peak, the ROA experienced some decline, falling below 7.5% in the later periods of 2024 and further decreasing to around 6.8% by the third quarter of 2025. This downward trend suggests a gradual reduction in asset utilization effectiveness in the most recent quarters.

Financial Leverage

The ratio of financial leverage showed a gradual decrease from 6.54 at the start of 2021 down to approximately 5.0 by mid-2022, reflecting a potential reduction in reliance on debt financing or an increase in equity base during this phase. However, from late 2022 onwards, financial leverage hovered between 5.1 and 5.7 without a clear directional trend, suggesting a relatively stable capital structure with moderate leverage maintained through the latest periods.

Return on Equity (ROE)

The ROE exhibited considerable variability. It started high at over 53% in early 2021 but declined to below 48% by the end of that year. A rebound occurred in early 2022, peaking again near 56%, but a significant downward trend followed thereafter. By early 2023, ROE had declined sharply to the high 30% range and fluctuated around the mid to high 40% range through mid-2024. The most recent quarters demonstrate a further decrease, with ROE falling to the high 30% and mid-30% levels by 2025’s third quarter. This indicates challenges in generating shareholder returns at historical levels recently.

Collectively, these trends suggest the company experienced periods of strong profitability and asset efficiency mainly through 2021 and early 2022, followed by a gradual reduction in performance measures such as ROA and ROE while maintaining moderate and stable financial leverage in recent periods. The decreased ROA and ROE in the most recent quarters may indicate pressure on profitability or asset utilization efficiency that could warrant further investigation into operational or market factors influencing these outcomes.

Net Profit Margin

The net profit margin exhibited some fluctuations over the observed periods. Initially, from March 2021 to March 2022, there was an overall increase, peaking at 12.57%. Following this peak, a decline occurred until March 2023, reaching approximately 7.48%. Subsequently, the margin showed a recovery trend up to around 10.43% by the end of 2024, though it declined again thereafter, finishing near 7.82% by the last period in September 2025. This pattern indicates periodic variability with phases of both contraction and expansion in profitability relative to sales.

Asset Turnover

Asset turnover demonstrated a gradual upward trend from 0.78 in early 2021 to a peak close to 0.95 by early 2023, suggesting improved efficiency in generating revenues from assets. However, after this peak, a slight decrease followed, with values settling around 0.87 by the final period. This suggests a modest reduction in asset utilization effectiveness toward the end of the timeline, yet overall efficiency remained relatively stable and higher than at the start.

Financial Leverage

Financial leverage declined steadily from 6.54 in March 2021 to a low of around 4.98 by September 2022, indicating a reduction in the extent to which equity is leveraged with debt or other liabilities. A reversal occurred subsequently, with leverage rising again to about 5.53 by mid-2025, then slightly decreasing to 5.5 at the end. This suggests a strategic adjustment in the capital structure, initially aiming to lower financial risk before increasing leverage moderately in later periods.

Return on Equity (ROE)

Return on equity showed a significant overall decline across the timeframe. Starting at 53.75% in early 2021, it decreased to a low point near 47.48% by late 2021 before rebounding to a peak of roughly 55.85% in March 2022. After this rebound, ROE gradually declined to approximately 37.26% by September 2025. The fluctuations reflect variations in profitability, asset use, and leverage combined, with the later trend indicating diminished returns to shareholders over time.

Net Profit Margin

The net profit margin exhibited fluctuations over the observed periods. Starting at 10.51% in March 2021, it reached a peak of 12.57% in March 2022, followed by a decline to 7.48% in March 2023. Afterward, the margin showed some recovery, stabilizing around the 10% mark during 2023 and early 2024, with values generally between 9.9% and 10.4%. However, from mid-2024 through 2025, the margin trended downward again, ending near 7.82% by September 2025. This pattern indicates variability in profitability with periods of both strength and weakness.

Asset Turnover

The asset turnover ratio demonstrated a gradual upward trend in the early phases, increasing from 0.78 in March 2021 to a peak of 0.95 in March 2023, reflecting improved efficiency in using assets to generate revenue. Following this peak, the ratio showed a slight declining trend, declining to 0.87 by September 2025. The overall pattern suggests initial gains in operational efficiency, which tapered off towards the later periods but remained relatively stable around the high 0.8 to low 0.9 range.

Return on Assets (ROA)

Return on assets followed a pattern somewhat similar to net profit margin, starting at 8.22% in March 2021 and peaking at 10.93% in March 2022. Subsequent quarters saw a downward movement to a low of 7.07% by March 2023. After this point, ROA showed some recovery and stabilization through early 2024, generally hovering around 9% to 9.6%. Nonetheless, starting mid-2024, ROA began declining again, finishing near 6.78% by September 2025. This indicates that asset utilization in generating net income improved initially but declined in more recent quarters.

Summary Insights

Overall, the financial ratios indicate that the period from early 2021 to early 2022 was marked by improving profitability and asset efficiency, as seen in rising net profit margin, asset turnover, and ROA. The year 2023 marked a downturn in profitability and asset returns, despite relatively high asset turnover ratios. Some recovery occurred through 2023 and early 2024, but the latter half of the observation period showed a gradual decline in both profitability and ROA, while asset turnover remained stable but slightly reduced. These trends suggest challenges affecting profit generation relative to assets and sales, alongside maintained but slightly decreased operational efficiency. Monitoring factors influencing profit margins and asset returns may be important for future financial performance.