Allergan PLC (NYSE:AGN)

Return on Assets (ROA)

The Return on Assets exhibits significant volatility over the observed period. It started at a moderate level of 2.88% at the end of 2015, sharply increasing to a peak of 11.61% in 2016. After this peak, the ROA declined substantially, turning negative in 2017 at -3.49% and continuing to deteriorate further in 2018 and 2019, reaching -5.57% by the end of 2019. This trend indicates declining asset efficiency and profitability following 2016.

Financial Leverage

The Financial Leverage ratio demonstrates a gradual downward trend from 1.77 in 2015 to 1.56 in 2018. It slightly increased to 1.63 in 2019 but remains below the initial 2015 level. This suggests a moderate reduction in leverage over the years, with a small reversal in the final year observed.

Return on Equity (ROE)

The Return on Equity mirrors the pattern seen in ROA, though with amplified magnitude. It was 5.11% in 2015 and significantly increased to 19.65% in 2016. Subsequently, the ROE dropped sharply to negative values from 2017 through 2019, with values worsening each year, reaching -9.06% by 2019. This reflects decreasing shareholder returns and overall profitability post-2016, intensified by the declining asset returns and the moderate leverage leveling.

The financial data reveals notable fluctuations and trends in key performance ratios over the five-year period from 2015 to 2019.

Net Profit Margin

The net profit margin experienced significant volatility. It started at a positive 25.98% in 2015 and surged dramatically to 102.76% in 2016, indicating exceptional profitability or possibly the effect of a one-time event. However, from 2017 onwards, the margin turned negative, declining to -25.88% and continuing to decrease slightly to -32.76% by 2019. This shift indicates a worsening profitability scenario in the latter years.

Asset Turnover

This ratio showed a gradual improvement over the period. Starting at 0.11 in 2015 and 2016, asset turnover increased steadily to 0.17 by 2019. This suggests that the entity has progressively enhanced its efficiency in generating sales from its asset base.

Financial Leverage

Financial leverage displayed a gradual decline from 1.77 in 2015 to 1.56 in 2018, implying a reduction in the use of debt or liabilities relative to equity. However, there was a slight rebound to 1.63 in 2019, indicating a modest increase in leverage at the end of the period.

Return on Equity (ROE)

ROE mirrored the erratic trend observed in net profit margin. It rose from 5.11% in 2015 to a peak of 19.65% in 2016, before plunging into negative territory, with values of -5.59% in 2017, -7.83% in 2018, and -9.06% in 2019. This decline signals deteriorating effectiveness in generating returns for shareholders during the later years.

Overall, while efficiency as indicated by asset turnover improved modestly, profitability and returns for equity holders weakened substantially after 2016, accompanied by fluctuating use of financial leverage. These patterns point to challenges in profitability and sustainable value creation in the latter part of the examined timeframe.

Tax Burden

The tax burden ratio decreased from 1.66 in 2015 to 1.15 in 2016. Data for subsequent years is not available, limiting the ability to analyze longer-term trends.

Interest Burden

The interest burden ratio improved significantly from 0.66 in 2015 to 0.91 in 2016, indicating better control over interest expenses. No data beyond 2016 is provided.

EBIT Margin

The EBIT margin showed a very strong performance in 2016 at 98.64%, a significant increase from 23.53% in 2015. However, the margin sharply declined to negative levels afterward, recording -60.85% in 2017, further deteriorating to -37.73% in 2018 and -26.99% in 2019. This suggests a severe and sustained decline in operating profitability starting from 2017.

Asset Turnover

Asset turnover exhibited a gradual upward trend over the five-year period, increasing from 0.11 in 2015 and 2016 to 0.13 in 2017, then rising to 0.16 in 2018 and 0.17 in 2019. This indicates modest improvements in the efficiency of asset utilization for generating sales.

Financial Leverage

Financial leverage decreased from 1.77 in 2015 to 1.56 by 2018, reflecting a reduction in reliance on debt. However, there was a slight increase to 1.63 in 2019. Overall, leverage remained relatively stable with a slight downward bias over the period.

Return on Equity (ROE)

ROE improved strongly from 5.11% in 2015 to 19.65% in 2016, aligned with the peak in EBIT margin. However, it turned negative from 2017 onward, with returns of -5.59%, -7.83%, and -9.06% in subsequent years, indicating losses and erosion of shareholder value. This decline corresponds with deteriorating operating profitability.

Net Profit Margin

The net profit margin displays significant volatility over the periods observed. It starts at a positive 25.98% in 2015, sharply increases to an exceptionally high value of 102.76% in 2016, indicating extraordinary profitability or perhaps one-time gains. However, the margin then deteriorates drastically in the following years, becoming negative from 2017 onwards, with values of -25.88%, -32.28%, and -32.76% respectively, suggesting sustained losses during this latter period.

Asset Turnover

Asset turnover shows a gradual improvement across the five-year span. Beginning at 0.11 in both 2015 and 2016, it rises moderately to 0.13 in 2017, then increases further to 0.16 in 2018 and reaches 0.17 by 2019. This trend indicates an improving efficiency in utilizing assets to generate sales over time.

Return on Assets (ROA)

Return on assets follows a pattern consistent with the fluctuations observed in the net profit margin. Starting at a modest 2.88% in 2015, it rises significantly to 11.61% in 2016, reflecting strong asset profitability. However, from 2017 onwards, ROA turns negative, declining to -3.49%, -5.01%, and further to -5.57% in 2019. This negative trend highlights diminishing returns on the company’s asset base during the latter years.

Tax Burden

The Tax Burden ratio declined from 1.66 in 2015 to 1.15 in 2016, showing a reduction in the proportion of earnings paid as taxes. Data for subsequent years is unavailable, preventing further trend analysis.

Interest Burden

This ratio increased significantly from 0.66 in 2015 to 0.91 in 2016, indicating an improvement in earnings before interest expense relative to operating earnings. No data exists for years after 2016.

EBIT Margin

The EBIT margin exhibited substantial volatility and a downward trend. It started at 23.53% in 2015, surged to an exceptionally high 98.64% in 2016, then swung dramatically to negative values: -60.85% in 2017, -37.73% in 2018, and further declined to -26.99% in 2019. This pattern signifies a sharp deterioration in operating profitability after 2016, with losses relative to sales persisting through 2019.

Asset Turnover

Asset turnover showed a consistent upward trend over the entire period. It remained stable at 0.11 in 2015 and 2016, then steadily increased to 0.13 in 2017, 0.16 in 2018, and 0.17 in 2019. This suggests incremental efficiency gains in generating sales from assets during these years.

Return on Assets (ROA)

ROA rose sharply from 2.88% in 2015 to 11.61% in 2016, indicating improved overall profitability. However, this was followed by a marked decline to negative levels: -3.49% in 2017, -5.01% in 2018, and -5.57% in 2019. This mirrors the downturn in operating profitability, pointing to losses at the net asset level after 2016.

Tax Burden

The tax burden ratio decreased notably from 1.66 in 2015 to 1.15 in 2016. Data for subsequent years is not available, limiting further trend analysis.

Interest Burden

The interest burden ratio improved significantly from 0.66 in 2015 to 0.91 in 2016, indicating a better capacity to cover interest expenses. No data exists for later periods to evaluate whether this trend continued.

EBIT Margin

The EBIT margin exhibited strong fluctuations. It was relatively healthy at 23.53% in 2015 and then surged sharply to an exceptionally high 98.64% in 2016. However, from 2017 onwards, the EBIT margin turned negative, indicating operational losses, with values of -60.85% in 2017, worsening further to -37.73% in 2018 and -26.99% in 2019. While the losses appear to reduce slightly after 2017, the margin remained negative, reflecting underlying operational challenges.

Net Profit Margin

The net profit margin mirrored the EBIT margin trends closely. It was positive at 25.98% in 2015 and increased dramatically to 102.76% in 2016, suggesting an extraordinary profit event or adjustment in that year. From 2017 onwards, the net profit margin turned negative, indicating net losses over the last three years. The margin declined to -25.88% in 2017, worsened to -32.28% in 2018, and slightly deteriorated further to -32.76% in 2019, demonstrating persistent profitability issues.

Overall Financial Performance Trends

The data indicates a period of strong profitability up to 2016 followed by a significant downturn in subsequent years, lasting through 2019. Positive margins in 2015 and 2016 were replaced by substantial negative margins from 2017 onward. Limited data for tax and interest burden ratios in years after 2016 restricts a complete assessment of the financial leverage and tax effects during the loss-making years. The pattern suggests operational and profitability challenges needing strategic attention.