Teradyne Inc. (NASDAQ:TER)

Return on Assets (ROA)

The ROA exhibited a rising trend from 16.77% in 2019 to a peak of 26.63% in 2021, indicating improving efficiency in utilizing assets to generate profits during this period. However, after 2021, the ROA declined significantly to 20.44% in 2022 and further dropped to 12.87% in 2023, suggesting a decrease in asset profitability in the most recent years.

Financial Leverage

Financial leverage consistently decreased over the analyzed period, moving from 1.88 in 2019 to 1.38 in 2023. This decline reflects a gradual reduction in the use of debt relative to equity, indicating a more conservative capital structure with potentially reduced financial risk over time.

Return on Equity (ROE)

ROE increased steadily from 31.58% in 2019 to 39.59% in 2021, mirroring the positive trend in ROA and likely supported by effective use of financial leverage. However, ROE decreased to 29.19% in 2022 and then sharply dropped to 17.77% in 2023. This decline corresponds with the reduced financial leverage and lower asset returns, indicating a diminished ability to generate net income from shareholders' equity in recent years.

Net Profit Margin

The net profit margin showed a general upward trend from 20.37% in 2019 to a peak of 27.4% in 2021, indicating improved profitability. However, it declined subsequently to 22.68% in 2022 and further to 16.77% in 2023, suggesting a weakening in profit generation relative to sales in recent years.

Asset Turnover

The asset turnover ratio demonstrated a rising trend from 0.82 in 2019 to 0.97 in 2021, reflecting more efficient use of assets to generate revenue. Thereafter, this ratio declined to 0.9 in 2022 and further to 0.77 in 2023, indicating a reduction in asset utilization efficiency.

Financial Leverage

Financial leverage steadily decreased from 1.88 in 2019 to 1.38 in 2023. This trend points to a gradual reduction in the company’s use of debt relative to equity financing over the period, implying a more conservative capital structure.

Return on Equity (ROE)

ROE increased from 31.58% in 2019 to a high of 39.59% in 2021, driven by improvements in profitability and asset turnover. However, it then declined sharply to 29.19% in 2022 and further down to 17.77% in 2023. This decline corresponds with reductions in net profit margin, asset turnover, and financial leverage, collectively impacting overall equity returns.

Tax Burden

The tax burden ratio shows a gradual decline over the five-year period, decreasing from 0.89 in 2019 to 0.85 in 2022 and remaining stable at 0.85 in 2023. This suggests a slight reduction in the effective tax rate impacting net income.

Interest Burden

The interest burden ratio has remained relatively stable and close to unity, indicating minimal interest expense impact on earnings before taxes. It increased from 0.96 in 2019 to a peak of 1.00 in 2022, and slightly decreased to 0.99 in 2023, demonstrating strong control over interest expenses during the period.

EBIT Margin

The EBIT margin exhibited a rising trend from 23.92% in 2019 to a peak of 31.83% in 2021, suggesting improved operational profitability. However, it declined notably to 26.75% in 2022 and further to 19.78% in 2023, reflecting challenges in maintaining prior profitability levels.

Asset Turnover

Asset turnover increased steadily from 0.82 in 2019 to 0.97 in 2021, indicating enhanced efficiency in generating sales from assets. Nevertheless, this ratio declined to 0.90 in 2022 and more sharply to 0.77 in 2023, pointing to reduced asset utilization effectiveness in recent years.

Financial Leverage

The financial leverage ratio demonstrated a consistent downward trend, decreasing from 1.88 in 2019 to 1.38 in 2023. This indicates a gradual reduction in reliance on debt financing and a more conservative capital structure over time.

Return on Equity (ROE)

ROE improved significantly from 31.58% in 2019 to a peak of 39.59% in 2021, reflecting strong overall profitability and effective use of equity capital during these years. However, it declined sharply to 29.19% in 2022 and further to 17.77% in 2023, suggesting considerable pressure on returns to shareholders in the most recent periods.

Net Profit Margin

The net profit margin demonstrated an overall increasing trend from 20.37% in 2019 to a peak of 27.4% in 2021, indicating improving profitability during this period. However, from 2021 onwards, the margin declined steadily to 16.77% by 2023, suggesting a reduction in profitability relative to sales in the most recent periods.

Asset Turnover

Asset turnover showed a gradual improvement from 0.82 in 2019 to 0.97 in 2021, reflecting increased efficiency in generating revenue from assets. This ratio then decreased to 0.77 by 2023, indicating a decline in the efficiency of asset utilization in the latest year compared to previous periods.

Return on Assets (ROA)

Return on assets followed a similar pattern to net profit margin, increasing from 16.77% in 2019 to a peak of 26.63% in 2021, suggesting enhanced overall profitability in relation to the asset base. After 2021, ROA declined to 12.87% in 2023, indicating a significant reduction in the company's ability to generate returns from its assets.

Summary of Trends

Between 2019 and 2021, the company exhibited notable improvements in profitability and efficiency, as seen in the increases in net profit margin, asset turnover, and ROA. This period reflects improved operational performance and asset management. However, from 2021 to 2023, all three ratios declined, with the most significant drops in net profit margin and ROA, pointing to challenges in maintaining profit levels and asset efficiency. The concurrent decline in asset turnover further suggests that the company’s ability to generate sales from its assets also weakened during the recent period, potentially impacting overall financial performance.

The financial data exhibits several notable trends over the five-year period from 2019 to 2023. Key profitability and efficiency ratios provide insights into operational performance and asset utilization.

Tax Burden

The tax burden ratio shows a gradual decline from 0.89 in 2019 to 0.85 in 2022, maintaining the same level through 2023. This suggests a slightly decreasing proportion of earnings paid in taxes relative to pre-tax income, indicating some improvement in tax efficiency or adjustments in tax liabilities.

Interest Burden

The interest burden demonstrates a stable trend, marginally improving from 0.96 in 2019 to 1.00 in 2022, followed by a slight decrease to 0.99 in 2023. This stability implies consistent management of interest expenses relative to operating income, with limited impact on profitability from financing costs.

EBIT Margin

The EBIT margin experienced growth from 23.92% in 2019 to a peak of 31.83% in 2021, reflecting enhanced operational profitability during this period. However, subsequent years saw a decline to 26.75% in 2022 and a sharper decrease to 19.78% in 2023. This downward trend signals potential pressures on operational efficiency or increased costs affecting earnings before interest and taxes.

Asset Turnover

Asset turnover improved steadily from 0.82 in 2019 to 0.97 in 2021, suggesting more effective utilization of assets to generate revenue. Nevertheless, this ratio decreased to 0.90 in 2022 and further to 0.77 in 2023, indicating reduced asset efficiency or declining sales relative to asset base in recent years.

Return on Assets (ROA)

The ROA followed a pattern consistent with EBIT margin and asset turnover, increasing from 16.77% in 2019 to a high of 26.63% in 2021. The ratio then declined markedly to 20.44% in 2022 and further to 12.87% in 2023, reflecting diminished overall profitability generated from assets. This decline may stem from the combined effects of reduced operational margins and asset utilization.

Overall, the data indicates a period of improving profitability and efficiency through 2021, followed by a notable deterioration in operational margins, asset use, and returns in the subsequent two years. Stability in tax and interest burdens suggests that these factors played a lesser role in these trends, pointing toward operational challenges as primary drivers of recent performance declines.

Tax Burden

The tax burden ratio demonstrates a gradual decline over the observed periods, decreasing from 0.89 in 2019 to 0.85 in both 2022 and 2023. This suggests a modest reduction in the proportion of income paid as taxes relative to earnings before tax, potentially reflecting more favorable tax conditions or improved tax management strategies.

Interest Burden

The interest burden ratio remains relatively stable, with a slight increase from 0.96 in 2019 to 1.00 in 2022, followed by a minor decrease to 0.99 in 2023. This stability indicates consistent coverage of interest expenses relative to earnings before interest and taxes, implying effective control over interest costs.

EBIT Margin

There is a notable rise in EBIT margin from 23.92% in 2019 to a peak of 31.83% in 2021, followed by a significant decline to 19.78% in 2023. This trend indicates the company's operational profitability improved substantially until 2021 but faced considerable pressure thereafter, potentially due to rising costs or decreased revenue efficiency.

Net Profit Margin

The net profit margin mirrors the pattern of EBIT margin, increasing from 20.37% in 2019 to 27.4% in 2021, then declining to 16.77% in 2023. This suggests that while operational gains initially improved overall profitability, later periods encountered challenges that negatively impacted net earnings relative to sales, possibly from increased expenses or other financial factors.