Super Micro Computer Inc. (NASDAQ:SMCI)

Return on Assets (ROA)

The Return on Assets demonstrates a generally upward trajectory from its initial recorded value of 4.27% in June 2019, increasing steadily to reach a peak of 18.81% in March 2023. Following this peak, there is a noticeable declining trend, falling to 10.72% by March 2025. Despite the recent decrease, the ROA remains substantially higher compared to earlier periods, indicating improvement in asset utilization over the years with some recent challenges.

Financial Leverage

The Financial Leverage ratio exhibits moderate fluctuation across the periods. Starting from 1.99 at September 2018, it decreases slightly until September 2020, then rises to a high of 2.41 in March 2022. From this point onwards, leverage declines steadily, reaching a low of 1.56 by December 2024 before a slight increase to 1.68 in March 2025. Overall, the leverage ratio remains within a narrow band between approximately 1.5 and 2.4, reflecting stable but varying levels of debt relative to equity over time.

Return on Equity (ROE)

Return on Equity follows a pattern similar to ROA but with more pronounced increases. It starts at 7.64% in June 2019 and rises steadily, peaking at 33.21% in June 2023. After this peak, ROE experiences a marked decline, falling to 18.04% by March 2025. The fluctuation indicates strong growth in equity returns up to mid-2023, followed by a downturn. This trend corresponds with movements in ROA and leverage, suggesting an integrated dynamic affecting profitability.

The financial data reveals several notable trends in the quarterly performance indicators over the analyzed periods.

Net Profit Margin

The net profit margin demonstrates a clear upward trend from the initial reported value of 2.05% in September 2018 to a peak of 8.98% in September 2022. Following this peak, there is a gradual decline to 5.34% by March 2025. This pattern indicates improving profitability over several years, reaching a high point, before experiencing some reduction in profit margin efficiency towards the most recent quarters.

Asset Turnover

The asset turnover ratio shows a fluctuating trend with a general decrease from 2.08 in September 2018 down to a low around 1.33 in December 2023. After this trough, the ratio recovers and increases again to 2.14 by March 2025. This suggests varying effectiveness in using assets to generate revenue, with a period of reduced efficiency followed by recovery.

Financial Leverage

Financial leverage experiences moderate fluctuations during the analyzed quarters. Starting at 1.99 in September 2018, the ratio declines to a lower point of 1.56 in December 2024, with intermittent rises and falls throughout. This trend suggests a cautious approach to debt or liabilities, with a gradual reduction in leverage over time, possibly reflecting a strategic decision to manage financial risk.

Return on Equity (ROE)

The ROE exhibits a strong and sustained increase from 7.64% in September 2018 to a peak of 33.21% in September 2022. After this apex, ROE declines to 18.04% by March 2025. This trajectory shows significant improvement in generating shareholder returns over the bulk of the period, followed by a notable contraction in profitability in the final quarters.

Overall, the data outlines a phase of strengthening profitability, asset efficiency, and equity returns, culminating around late 2022. Subsequently, a correction period emerges, characterized by reduced margins, asset turnover, and returns on equity, accompanied by a steady decrease in financial leverage. These trends may reflect changing operational conditions, market dynamics, or strategic adjustments in capital structure and asset utilization.

Tax Burden

The tax burden ratio, observable from the third quarter of 2019 onward, fluctuates between approximately 0.81 and 1.02. The ratio increased in late 2019 and early 2020, peaking above 1.0, suggesting occasional periods where tax expenses might have been lower than earnings before taxes or slight variations in tax effects. From mid-2020 through mid-2024, the tax burden mostly stabilizes around the mid-0.8 to 0.9 range, with minor oscillations indicating relatively consistent tax expense relationships over time.

Interest Burden

The interest burden ratio remains very stable, ranging narrowly from 0.93 to 0.99 across all recorded periods from late 2019 through mid-2024. This stability reflects consistent interest expense levels relative to operating income, indicating well-managed debt servicing costs or low variability in interest-bearing liabilities.

EBIT Margin

The EBIT margin shows an overall upward trend beginning in late 2019, rising from approximately 2.7% to a peak around 10.7% in late 2022 and early 2023. This improvement signals enhanced operational profitability. From early 2023 onward, the margin declines gradually but remains above 6%, suggesting some retrenchment in profitability though still significantly improved compared to earlier periods.

Asset Turnover

Asset turnover exhibits a declining trend from late 2018 through mid-2021, dropping from over 2.0 to about 1.5, indicating reduced efficiency in utilizing assets to generate revenue. However, from mid-2021 through mid-2024, asset turnover improves, recovering to above 2.0 by early 2025. This pattern suggests a period of asset inefficiency followed by operational improvements in generating sales from assets.

Financial Leverage

Financial leverage trends downward from just under 2.0 in 2018 to around 1.5-1.7 by 2024, with some minor fluctuations. The reduction indicates a gradual decrease in reliance on debt financing or improved equity levels, which could reduce financial risk. Mid-2021 to mid-2022 saw a peak around 2.4, followed by a marked decline, representing dynamic financing strategy adjustments.

Return on Equity (ROE)

ROE shows a strong upward trend beginning around late 2019, rising from approximately 7.6% to a peak exceeding 33% by late 2022. This significant increase correlates with improved profitability and operational efficiency evidenced in the EBIT margin and asset turnover trends. Post-peak, ROE decreases but remains robust above 18% into early 2025, reflecting sustained though somewhat moderated shareholder returns.

Overall Insights

The data reveals a period of operational challenges in asset utilization and moderate profitability up to early 2020, followed by substantial improvements in profitability and returns through late 2022. Efficiency gains are supported by increased EBIT margins and a rebound in asset turnover after mid-2021. Financial leverage declined overall, implying a more conservative capital structure. Despite some recent margin contraction and reduced ROE from peak levels, the company maintains strong profitability and return metrics relative to prior periods.

An analysis of the financial ratios over the observed periods reveals several noteworthy trends and fluctuations.

Net Profit Margin

The net profit margin exhibits a general upward trajectory from the initial recorded values starting at approximately 2.05% in September 2019. There is a steady increase through the ensuing quarters, culminating at a peak near 8.98% by September 2023. Following this peak, a gradual decline is evident, with the margin decreasing to about 5.34% by March 2025. This suggests a notable improvement in profitability efficiency during the earlier periods, followed by some margin compression in the most recent quarters.

Asset Turnover

The asset turnover ratio shows a declining trend initially, decreasing from around 2.08 in September 2019 to a low near 1.33 by December 2024. However, after this trough, a recovery pattern emerges, with the ratio rising again to approximately 2.14 by March 2025. This pattern indicates an initial reduction in the efficiency with which assets generate revenue, followed by an improvement toward the end of the period analyzed.

Return on Assets (ROA)

The return on assets increases significantly over the span observed. Starting at about 4.27% in September 2019, it experiences a marked upward trend, peaking at nearly 18.81% in September 2023. Post this peak, the ROA shows a declining trend, falling to around 10.72% by March 2025. This trend mirrors the movement observed in net profit margin and suggests that the firm’s asset profitability strongly improved before retreating somewhat in the later periods.

Overall, the financial ratios depict a period of enhanced profitability and asset utilization effectiveness that peaked around late 2023, followed by a moderation in both profitability margins and asset efficiency. These movements may indicate external or internal factors influencing the company’s operational and financial performance in the most recent quarters.

Tax Burden

The tax burden ratio exhibits some fluctuations starting from 0.83 in September 2019, peaking slightly above 1.00 in December 2020, indicating periods where tax expense exceeded income before tax. Subsequently, it declined and stabilized around 0.84 to 0.87 between 2021 and mid-2023. Toward the end of the observed period, the ratio trends slightly upward, reaching approximately 0.92 to 0.95, suggesting changes in tax obligations relative to earnings over time.

Interest Burden

This ratio shows relatively high stability throughout the timeline, beginning around 0.93 in late 2019 and maintaining values near 0.97 to 0.99 thereafter. The consistency near unity implies stable interest expenses relative to operating income, with minimal impact from financing costs on profitability across the periods analyzed.

EBIT Margin

The earnings before interest and taxes (EBIT) margin demonstrates a general upward trend from the beginning of the series, starting near 2.67% in late 2019 and increasing gradually to a peak above 10% by the end of 2022. After reaching this peak, the margin shows some decline but remains above 6%, indicating improved operational efficiency and profitability compared to earlier periods.

Asset Turnover

The asset turnover ratio declines from above 2.00 in the earlier months of 2019, dropping steadily to lows around 1.33 to 1.53 during late 2023. This represents decreasing efficiency in generating sales from assets during these periods. However, there is a notable recovery starting in early 2024, with the ratio climbing back above 2.00, which reflects a rebound in asset utilization effectiveness near the end of the dataset.

Return on Assets (ROA)

ROA follows a rising trajectory from approximately 4.27% in late 2019 to a peak near 18.81% in early 2023, showing significant improvement in overall asset profitability during this timeframe. After this peak, there is a gradual decline, with values dropping to around 10.72% by mid-2025. This suggests that while asset returns strengthened markedly for several quarters, recent periods have experienced reduced efficiency in generating net income from asset investments.

The analysis of the quarterly financial data reveals several important trends relating to the company's profitability and efficiency ratios over the observed periods.

Tax Burden

The tax burden ratio shows some volatility but generally remains within the range of 0.81 to 0.99 throughout the periods starting from Sep 30, 2019. It peaks around 1.02 in Sep 30, 2020 and then stabilizes mostly below 0.95 in the subsequent quarters. Toward the latest available quarters (ending Mar 31, 2025), there is a slight downward adjustment with values near 0.89, indicating a marginal reduction in tax-related expenses relative to earnings.

Interest Burden

The interest burden ratio remains fairly stable and high across all reported quarters, consistently near or above 0.93. This suggests the company has maintained steady control over interest expenses relative to pre-interest earnings, with only minimal fluctuations. The values stabilize between 0.97 and 0.99 in most recent quarters, which implies efficient management of interest costs over the entire period.

EBIT Margin

The EBIT margin exhibits a generally positive and upward trend from the initial quarters. Starting at around 2.67% in Sep 30, 2019, it increases steadily to a peak of 10.69% in Mar 31, 2023, indicating enhanced operational profitability. After reaching this high point, the margin experiences a gradual decline, reaching 6.17% by Mar 31, 2025, but remains significantly above the earlier part of the data series. This trend suggests periods of improving operational efficiency, possibly followed by some moderation in profitability.

Net Profit Margin

Net profit margin parallels the EBIT margin's trajectory, beginning near 2.05% in Sep 30, 2019 and rising to a maximum of 8.98% in Sep 30, 2023. This margin reflects overall profitability after all expenses, including taxes and interest. After peaking, the net profit margin slightly declines, ending at approximately 5.34% by Mar 31, 2025. The increase over time indicates better overall profitability, despite some reduction in the latest quarters.

In summary, the company demonstrates improved profitability from late 2019 through early 2023, as evidenced by both EBIT and net profit margins. Interest expenses are well-managed throughout, contributing to stable interest burden ratios. The tax burden shows some variability but tends to decrease slightly in recent periods, which could also support sustained earnings performance. The latter quarters present a softening in margins, suggesting the need to monitor operational and external factors that may be influencing profitability downward after a period of growth.