Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Paying user area
Try for free
Teradyne Inc. pages available for free this week:
- Statement of Comprehensive Income
- Cash Flow Statement
- Common-Size Income Statement
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Operating Profit Margin since 2005
- Return on Equity (ROE) since 2005
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Teradyne Inc. for $22.49.
This is a one-time payment. There is no automatic renewal.
We accept:
Profitability Ratios (Summary)
Teradyne Inc., profitability ratios
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The analysis of the financial performance over the five-year period reveals several key trends in profitability and efficiency ratios.
- Gross Profit Margin
- The gross profit margin has remained relatively stable, fluctuating slightly between 57.21% and 59.59%. The highest margin was observed in 2021 at 59.59%, and the lowest in 2020 at 57.21%. This indicates a consistent ability to manage production costs relative to revenue, though there was a slight downward movement in 2023 to 57.42% from previous years.
- Operating Profit Margin
- Operating profit margin showed a rising trend from 24.12% in 2019 to a peak of 32.43% in 2021. However, there was a noticeable decline thereafter, dropping to 26.37% in 2022 and further to 18.72% in 2023. This suggests increasing operating expenses or reduced operational efficiency in the last two years.
- Net Profit Margin
- Net profit margin increased steadily from 20.37% in 2019 to a high of 27.4% in 2021. Similar to operating margin, it declined in the subsequent years to 22.68% in 2022 and 16.77% in 2023, indicating reduced overall profitability possibly due to increased costs, expenses, or other non-operating factors affecting net income.
- Return on Equity (ROE)
- ROE exhibited a strong upward trend from 31.58% in 2019 to 39.59% in 2021, reflecting enhanced efficiency in generating returns for shareholders. Thereafter, ROE decreased significantly to 29.19% in 2022 and sharply to 17.77% in 2023, which may reflect declining net income or changes in equity structure negatively impacting shareholder returns.
- Return on Assets (ROA)
- ROA followed a similar pattern to ROE, rising from 16.77% in 2019 to 26.63% in 2021, indicating improved asset utilization. However, it declined to 20.44% in 2022 and further to 12.87% in 2023, suggesting a reduction in efficiency in using assets to generate profits, potentially linked to the overall decline in profitability.
In summary, the company’s profitability and return metrics peaked in 2021, with solid gross margins and strong returns on equity and assets. Post-2021, there has been a consistent downward trend in operating and net margins as well as in returns. This deterioration signals challenges in maintaining profit levels and efficiency, warranting further investigation into cost management, revenue quality, and operational effectiveness going forward.
Return on Sales
Return on Investment
Gross Profit Margin
Teradyne Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Revenue Trends
- Revenues increased steadily from US$2.29 billion in 2019 to a peak of approximately US$3.70 billion in 2021. Subsequently, revenues declined to about US$3.16 billion in 2022 and further decreased to approximately US$2.68 billion in 2023. This indicates a strong growth phase followed by a notable contraction in the last two years of the period analyzed.
- Gross Profit Trends
- Gross profit exhibited a pattern loosely aligned with revenue changes. It grew from roughly US$1.34 billion in 2019 to a high of about US$2.21 billion in 2021, before falling to US$1.87 billion in 2022 and declining further to approximately US$1.54 billion in 2023. The decline in gross profit appears to be consistent with the revenue reduction observed during the same period.
- Gross Profit Margin Trends
- The gross profit margin remained relatively stable over the five-year period, ranging between 57.21% and 59.59%. It showed a slight decrease from 58.38% in 2019 to 57.21% in 2020, then increased to the highest level of 59.59% in 2021. Following that, the margin slightly declined to 59.18% in 2022 and dropped again to 57.42% in 2023. The variation in margin is moderate and indicates that despite fluctuations in revenue and gross profit, the company maintained a relatively consistent cost structure relative to revenue.
- Overall Insights
- The data indicates a growth cycle peaking in 2021, followed by a decline in subsequent years, affecting both revenues and gross profit. The consistent gross profit margin suggests that changes in profitability were primarily driven by changes in revenue volume rather than cost efficiency. The downward trend from 2022 to 2023 warrants further investigation into market conditions or operational factors affecting sales performance.
Operating Profit Margin
Teradyne Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Income from operations | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
| Operating Profit Margin, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| Operating Profit Margin, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Operating profit margin = 100 × Income from operations ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
Over the observed five-year period, the financial data reveals notable fluctuations in key performance indicators.
- Income from operations
- This metric experienced significant growth from 553,654 thousand US dollars in 2019 to a peak of 1,200,720 thousand US dollars in 2021, indicating a strong operational performance during these years. However, from 2021 onwards, income from operations showed a marked decline, falling to 831,939 thousand US dollars in 2022 and further down to 501,068 thousand US dollars by 2023. This downward trend suggests challenges in maintaining operational profitability post-2021.
- Revenues
- Revenues followed a generally upward trajectory from 2,294,965 thousand US dollars in 2019, increasing to a high of 3,702,881 thousand US dollars in 2021. Similar to income from operations, revenues declined after 2021, dropping to 3,155,045 thousand US dollars in 2022 and further to 2,676,298 thousand US dollars in 2023. Despite the decline, the revenue figures in 2023 remain higher than the 2019 baseline.
- Operating profit margin
- The operating profit margin improved steadily from 24.12% in 2019 to reach its highest point at 32.43% in 2021, reflecting enhanced efficiency or pricing power during this period. After 2021, the margin contracted considerably to 26.37% in 2022 and further to 18.72% in 2023. This reduction in margin indicates reduced profitability relative to revenues in the recent years, which may signal increased costs or pricing pressures.
In summary, the data highlights a period of growth and heightened operational efficiency culminating in 2021, followed by a notable decline in both income from operations and revenues through 2023. The trailing decline in operating profit margin further underscores potential challenges affecting profitability in the more recent years.
Net Profit Margin
Teradyne Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
| Net Profit Margin, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| Net Profit Margin, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Net profit margin = 100 × Net income ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals notable fluctuations in both revenue and profitability over the five-year period ending in 2023. Revenue increased significantly from 2019 through 2021, reaching a peak in 2021, followed by consecutive declines in 2022 and 2023. Net income followed a similar pattern, with substantial growth through 2021 and subsequent decreases in the two following years.
- Revenue Trends
- Revenues rose from approximately 2.29 billion US dollars in 2019 to a peak of about 3.70 billion US dollars in 2021, representing strong growth during this period. However, revenues decreased by roughly 14.8% in 2022 to around 3.16 billion US dollars and further dropped by about 15.2% in 2023 to approximately 2.68 billion US dollars. This decline indicates a reversal of the prior growth trend.
- Net Income Trends
- Net income showed a robust upward trend from 467 million US dollars in 2019 to over 1 billion US dollars in 2021, more than doubling within two years. In 2022, net income decreased substantially by nearly 30%, and in 2023, it fell further by approximately 37%, settling at 449 million US dollars, which is close to the 2019 level. This downturn suggests challenges impacting profitability after the peak in 2021.
- Profitability Metrics
- The net profit margin increased steadily from 20.37% in 2019 to a high of 27.4% in 2021, indicating improving efficiency and profitability during this period. Subsequently, the margin declined to 22.68% in 2022 and continued down to 16.77% in 2023. The margin in 2023 represents the lowest point in the five-year span, reflecting diminishing profitability relative to revenue.
- Summary of Observations
- The data indicate a growth phase culminating in 2021, characterized by rising revenues, net income, and profit margins. Following this peak, the company experienced a contraction in both sales and earnings metrics, accompanied by a notable reduction in profitability margins. These trends may signal increased market challenges, cost pressures, or other operational factors affecting financial performance in the latter years.
Return on Equity (ROE)
Teradyne Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | ||||||
| Shareholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
| ROE, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| ROE, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- Net income exhibited a strong upward trajectory from 2019 to 2021, increasing from approximately 467 million to over 1 billion US dollars. However, this positive trend reversed in the following years, with net income declining significantly to around 715 million in 2022 and further down to approximately 449 million in 2023.
- Shareholders’ Equity
- Shareholders’ equity showed consistent growth over the analyzed period. It rose steadily from about 1.48 billion US dollars in 2019 to a peak of 2.56 billion in 2021. Although there was a minor decline in 2022 to roughly 2.45 billion, equity increased again slightly in 2023 to approximately 2.53 billion US dollars.
- Return on Equity (ROE)
- ROE followed a pattern similar to net income, reaching its highest point in 2021 at nearly 40%. After this peak, ROE decreased sharply to about 29% in 2022 and declined further to just under 18% in 2023. This decline indicates a reduced efficiency in generating profit from shareholders' equity in the last two years.
- Summary
- The overall financial data reflect a phase of significant profitability growth until 2021, followed by a notable downturn in net income and profitability ratios thereafter. Despite this, the shareholders’ equity remained relatively stable with modest growth, suggesting the company maintained a solid capital base even as earnings and returns diminished. The sharp decline in ROE highlights increasing challenges in leveraging equity to generate profits in the latest years observed.
Return on Assets (ROA)
Teradyne Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
| ROA, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| ROA, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Trend
- The net income showed a strong upward trend from 2019 to 2021, increasing significantly from 467,468 thousand US dollars in 2019 to a peak of 1,014,589 thousand US dollars in 2021. However, after this peak, net income declined sharply, falling to 715,501 thousand US dollars in 2022 and further decreasing to 448,752 thousand US dollars in 2023. This indicates a notable contraction in profitability in the last two years.
- Total Assets Trend
- Total assets increased steadily from 2,787,014 thousand US dollars in 2019 to a peak of 3,809,425 thousand US dollars in 2021. After this, total assets declined slightly in 2022 to 3,501,252 thousand US dollars and remained relatively stable in 2023 at 3,486,824 thousand US dollars. This suggests some asset reallocation or reduction occurring after the 2021 peak.
- Return on Assets (ROA) Analysis
- ROA followed a similar trend to net income, rising from 16.77% in 2019 to a high of 26.63% in 2021, indicating improved asset efficiency and profitability. Subsequently, ROA declined to 20.44% in 2022 and further to 12.87% in 2023, reflecting decreased effectiveness in generating income from assets in the most recent periods.
- Overall Financial Performance
- The analyzed data reveal a peak performance year in 2021, characterized by the highest net income, total assets, and ROA over the five-year span. Post-2021, the company experienced a decline in profitability and asset base, which corresponded with a reduction in efficiency in asset utilization. This pattern indicates that while the company grew and improved profitability up to 2021, the following years exhibited challenges in maintaining that growth and operational efficiency.