DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
Quarterly Data
Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.
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- Analysis of Profitability Ratios
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- Return on Assets (ROA) since 2005
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- Price to Sales (P/S) since 2005
- Analysis of Revenues
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Two-Component Disaggregation of ROE
Albemarle Corp., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
- Return on Assets (ROA)
- The ROA data begins from March 31, 2019, showing an initial figure of 9.15%. From this starting point, there is a general declining trend through to December 31, 2020, where ROA falls to 3.6%. Throughout 2021, ROA remains relatively low and fluctuates modestly between 1.13% and 6.51%, displaying a dip in early 2021 and a slight recovery towards the end of that year. Beginning in 2022, a marked improvement is observed, with ROA rising steadily and reaching a peak of 20.92% by March 31, 2023. This indicates increased efficiency in asset utilization in recent quarters.
- Financial Leverage
- Financial leverage exhibits moderate fluctuations over the entire period. Initially starting close to 2.0 in early 2018, it trends slightly upward, peaking at 2.54 around mid-2020. Following this peak, there is a gradual decline to approximately 1.75 by mid-2021. For the subsequent quarters up to the first quarter of 2023, leverage hovers between roughly 1.9 and 2.06, indicating a relatively stable capital structure with modest variation in the use of debt relative to equity.
- Return on Equity (ROE)
- The ROE series starts from March 31, 2019, with an initial value of 19.34%, followed by a downward trajectory reaching a low of 6.34% by mid-2021. During 2021, ROE shows volatility, including a significant dip to 2.2% in September and some recovery in subsequent quarters. From early 2022 onwards, ROE experiences a strong upward trend, peaking at 39.89% by March 31, 2023. This significant increase in ROE aligns with the improving ROA and implies enhanced profitability and return to equity holders in the latest period.
- Overall Insights
- The data reflects a period of decline in profitability metrics (ROA and ROE) during 2019 through mid-2021, coinciding with relatively stable but slightly fluctuating leverage ratios. Beginning in 2022, profitability metrics substantially improve, indicating stronger operational performance and financial returns. This improvement occurs despite modest fluctuations in financial leverage, suggesting improved operational efficiency and profit generation without corresponding increases in financial risk.
Three-Component Disaggregation of ROE
Albemarle Corp., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
- Net Profit Margin
- The net profit margin shows a notable fluctuation throughout the period analyzed. Starting from a positive margin around 20% in early 2019, it gradually declines to a low point near 6% in mid-2021. Subsequently, there is a recovery with a significant increase beginning late 2021 through early 2023, reaching an all-time high of approximately 41.89%. This pattern suggests periods of both contraction and expansion in profitability, with recent quarters demonstrating strong improvement.
- Asset Turnover
- The asset turnover ratio reveals a general downward trend from early 2019 through 2021, decreasing from approximately 0.45 to around 0.30. However, starting in late 2021, there is a clear upward trend, with asset turnover rising steadily to about 0.50 by the first quarter of 2023. This indicates a recent enhancement in the company's efficiency in generating sales from its assets after several quarters of reduced performance.
- Financial Leverage
- Financial leverage remained relatively stable in the range of about 2.0 to 2.5 from 2018 through early 2020, with a peak around 2.54 in mid-2020. From late 2020 onward, there is a decreasing trend in leverage, dropping below 2.0 during 2021 and maintaining slightly below or around that level through early 2023. This decline suggests a conservative approach towards debt or a reduction in reliance on borrowed funds over the latter periods.
- Return on Equity (ROE)
- The return on equity followed a trend similar to net profit margin, with initial values near 19% in early 2019 that declined steadily to a low near 2.2% in late 2021. Following this trough, a marked recovery is observed, with ROE climbing significantly to almost 40% by the first quarter of 2023. This improvement signals enhanced profitability and effective equity utilization during the most recent periods.
Five-Component Disaggregation of ROE
Albemarle Corp., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
- Tax Burden
- The tax burden ratio, observable from the first recorded period in March 31, 2019, generally remained stable, fluctuating between approximately 0.76 and 0.98 over the entire period. The highest value appeared in December 31, 2021, followed by a notable decrease during 2022, before increasing again towards March 31, 2023.
- Interest Burden
- The interest burden ratio showed a declining trend from around 0.94 in early 2019 to a low point near 0.71 in September 30, 2021. However, from late 2021 onwards, there was a recovery, and the ratio improved steadily, reaching about 0.97 by March 31, 2023.
- EBIT Margin (%)
- The EBIT margin demonstrated significant volatility. After beginning at over 26% in early 2019, it experienced a downward trend through most of 2019 and 2020, decreasing to as low as approximately 6.45% in September 30, 2021. Subsequently, there was a dramatic recovery and strong growth, rising sharply to nearly 50% by March 31, 2023, indicating a substantial increase in profitability in the most recent quarters.
- Asset Turnover
- Asset turnover gradually decreased from around 0.45 in early 2019 to a low near 0.3 by mid-2021. From that point forward, the ratio reversed course, increasing steadily to 0.5 by the end of the observed period in March 31, 2023. This suggests improved efficiency in utilizing assets to generate revenue in the later stages.
- Financial Leverage
- Financial leverage was relatively stable around 2.1 to 2.5 during 2018 and 2019 but declined notably to below 1.8 in early 2021. After this reduction, the leverage ratio increased somewhat, fluctuating around 1.9 to 2.0 during 2022 and early 2023, signaling some increase in debt or equity usage but remaining below earlier peak levels.
- Return on Equity (ROE) (%)
- ROE showed a downward trend from over 19% in early 2019 to a trough near 2.2% in September 2021, indicating a period of declining shareholder profitability. A pronounced recovery followed, with ROE increasing sharply to nearly 40% by March 31, 2023. This rebound aligns with improvements in EBIT margin and asset turnover, reflecting enhanced overall operational and financial performance in the most recent periods.
Two-Component Disaggregation of ROA
Albemarle Corp., decomposition of ROA (quarterly data)
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
- Net Profit Margin
- The net profit margin shows a notable fluctuation over the observed period. Starting from just above 20% in early 2019, it declines observedly through 2020, reaching approximately 11-12%. In 2021, the margin exhibits a volatile pattern with a peak near 21.78% in the first quarter, followed by a pronounced drop to below 4% in the third quarter, then a mild recovery at year-end. From 2022 onward, there is a strong upward trend culminating in a significant increase to nearly 42% by the first quarter of 2023, indicating improved profitability efficiency in recent periods.
- Asset Turnover
- Asset turnover demonstrates a gradual downward trend starting around 0.45 in early 2019, declining steadily to a low point near 0.3 throughout 2020 and 2021. This suggests a reduction in efficiency of asset utilization during these years. However, from 2022 onwards, asset turnover recovers notably, rising to 0.5 by the first quarter of 2023. This improvement points to enhanced operational efficiency and better use of assets in recent quarters.
- Return on Assets (ROA)
- ROA follows a similar trajectory as net profit margin and asset turnover, with a declining pattern from over 9% in early 2019 to below 4% through 2020 and 2021, reflecting diminished overall asset profitability. A brief rebound in 2021 is followed by another low point toward the end of the year. In 2022 and into early 2023, ROA increases sharply, rising to over 20%, demonstrating a substantial improvement in overall asset profitability, aligned with increases in both net profit margin and asset turnover. This suggests a strengthening financial performance driven by better profit margins and enhanced asset utilization.
Four-Component Disaggregation of ROA
Albemarle Corp., decomposition of ROA (quarterly data)
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
- Tax Burden
- The tax burden ratio exhibits relative stability from March 2019 through March 2023, fluctuating between 0.76 and 0.98. There is a noticeable spike to 0.98 by December 2021, followed by a decline to approximately 0.76-0.80 in the subsequent quarters, and then a rise again to the mid-0.80 range by March 2023. Overall, the ratio maintains a narrow range, indicating consistent tax impact on earnings over the period.
- Interest Burden
- The interest burden ratio demonstrates a gradual decline from 0.94 in early 2019 down to a low of 0.71 in September 2021, suggesting increasing interest expenses relative to EBIT during this interval. However, from the end of 2021 onwards, the ratio improves markedly, reaching a high of 0.97 by March 2023. This indicates a recovery in interest expense management or reduced interest costs affecting operating profit less.
- EBIT Margin
- EBIT margin shows significant volatility through the examined quarters. Starting from levels around 26% in early 2019, it declines to a trough near 6.45% by September 2021, indicating a sharp deterioration in operating profitability. Subsequently, there is a pronounced rebound starting late 2021, with the margin climbing steeply to nearly 50% by the first quarter of 2023. This pattern suggests a period of challenge followed by strong operational performance improvements.
- Asset Turnover
- The asset turnover ratio steadily decreases from 0.45 in early 2019 to around 0.30 by the end of 2021, indicating reduced efficiency in utilizing assets to generate revenue. After this period, there is an upward trend beginning in 2022, with the ratio increasing to 0.50 by March 2023. This rebound points to enhanced asset utilization or improved sales generation relative to asset base in recent periods.
- Return on Assets (ROA)
- ROA follows a trajectory similar to EBIT margin and asset turnover. From roughly 9% in early 2019, it declines progressively to near 1.13% by the third quarter of 2021, signifying reduced profitability relative to assets employed. A substantial recovery then takes place, with ROA rising sharply to over 20% by the first quarter of 2023. This demonstrates restored and strengthened overall asset profitability in recent quarters.
Disaggregation of Net Profit Margin
Albemarle Corp., decomposition of net profit margin ratio (quarterly data)
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
- Tax Burden
- The tax burden ratio demonstrates moderate fluctuations over the observed periods. Starting at 0.83 in early 2019, it remained relatively stable through 2019 and 2020, generally ranging between 0.81 and 0.89. However, in 2021, a notable increase to 0.98 occurred in the first quarter, followed by a decline through 2021 and 2022, reaching a low of 0.76 mid-2022 before gradually rising again toward 0.86 in early 2023. These variations suggest some volatility in the effective tax rate impacting profitability.
- Interest Burden
- The interest burden ratio exhibits a downward trend from 0.94 in early 2019 to a low of 0.71 in late 2021, indicating an increased interest expense relative to earnings before interest and taxes during that period. Subsequent quarters in 2022 and early 2023 show a recovery trend, increasing back up to approximately 0.96 by the first quarter of 2023. This pattern implies variability in financing costs or interest obligations that have impacted operational efficiency at different times.
- EBIT Margin
- EBIT margin shows marked variability through the quarters. Initially, margins in 2019 hovered around 20-26%, with a decline observed through 2020 into early 2021, reaching a low point at approximately 6.45% in the third quarter of 2021. Subsequently, a strong upward trend emerged from late 2021 onward, with EBIT margins significantly improving, peaking near 50% by the first quarter of 2023. This indicates a substantial increase in operational profitability and efficiency in the most recent periods.
- Net Profit Margin
- Net profit margin follows a similar pattern to EBIT margin, starting from levels around 20.5% in early 2019 and progressively declining to a low of around 3.72% by the third quarter of 2021. Following this decline, a considerable recovery is visible, with margins rebounding sharply to approximately 42% by the first quarter of 2023. The recovery suggests improved control over costs and other expenses following the earlier period of weak profitability.