Becton, Dickinson & Co. (NYSE:BDX)

Return on Assets (ROA)

The return on assets demonstrated a downward trend from December 31, 2016, starting at 5.38%, sharply declining to a low of 0.08% by March 31, 2018. Subsequently, there was a gradual recovery with fluctuations, reaching a value of 3.51% by March 31, 2022. The interim period shows some volatility, yet the overall trajectory from early 2018 is upward, indicating improvement in asset profitability over time.

Financial Leverage

The financial leverage ratio showed a consistent decrease from 3.21 in December 31, 2016, to approximately 2.21-2.23 in early 2022. The ratio stabilized in the range of 2.20 to 2.30 from around 2019 onward, reflecting a reduction in leverage and potentially a more conservative capital structure compared to the earlier period.

Return on Equity (ROE)

The return on equity mirrored the pattern seen in ROA, with an initial high of 17.26% as of December 31, 2016, followed by a steep decline reaching a low of 0.22% in March 31, 2018. After this low point, ROE steadily improved with some fluctuations, ending at 7.83% in March 31, 2022. This suggests a recovery in shareholder returns after a significant downturn.

Overall Insights

The analyzed financial ratios indicate a period of weakened profitability and reduced equity returns between 2017 and early 2018, accompanied by a notable decrease in financial leverage. Since then, both the return on assets and equity have been on a recovery path, with leverage ratios stabilizing at lower levels, signifying a strengthening financial position and improved operational efficiency. The decline in leverage together with improving profitability metrics point towards a shift towards a more balanced and sustainable financial strategy over the analyzed period.

The analysis of the quarterly financial ratios reveals several trends in profitability, operational efficiency, financial leverage, and return on equity over the observed periods.

Net Profit Margin

The net profit margin exhibits notable fluctuations across the quarters. It started relatively strong at over 10% at the end of 2016 and early 2017 but experienced a sharp decline to nearly 0.34% in the first quarter of 2018. Following this low point, the margin recovered partially, fluctuating mostly between 5% and 10% in the subsequent quarters. The margin peaked again close to 10.33% by the end of 2021, signaling improved profitability after a period of volatility.

Asset Turnover

Asset turnover ratios started at around 0.51 but declined significantly below 0.25 by late 2017. From 2018 onward, the turnover ratio demonstrated a gradual upward trend, rising from 0.27 up to near 0.38 by late 2021. This indicates a steady improvement in operational efficiency and better utilization of assets to generate sales over time.

Financial Leverage

Financial leverage shows a generally decreasing trend over the assessed period. It began at a high level of 3.21 and consistently declined to the region of 2.2 by late 2021. This suggests a conscious effort to reduce dependency on debt financing or a shift towards a more conservative capital structure, potentially lowering financial risk.

Return on Equity (ROE)

Return on equity reflects significant variability in alignment with the trends observed in profitability and leverage. ROE dropped sharply from above 17% in late 2016 to below 2% at the end of 2017 and early 2018, coinciding with minimal net margins and declining leverage. However, from 2018 forward, ROE gradually improved, reaching close to 8.8% by late 2021, indicating a recovery in overall shareholder returns influenced by improved profit margins and operational efficiencies.

In summary, the periods studied evidence a cycle of decline followed by recovery across profitability and efficiency measures. The firm appears to have enhanced asset utilization and reduced financial leverage, contributing to a moderate rebound in returns to shareholders despite ongoing fluctuations in profit margins.

The financial indicators exhibit notable fluctuations over the periods analyzed, reflecting changes in operational efficiency, cost management, and leverage effects.

Tax Burden

The tax burden ratio displays considerable volatility, initially fluctuating around values close to 1.0 with peaks above 1.0 during early 2017 and the end of 2019. A steep decline is seen mid-2018, reaching a low near 0.27, followed by a gradual recovery to values around 0.9 to 0.98 by early 2022. The variability suggests shifts in tax expenses relative to pre-tax earnings, impacting net profitability across quarters.

Interest Burden

The interest burden demonstrates a generally upward trend after reaching a low in early 2018 near 0.05. Beginning with relatively stable values around 0.8 in 2016 and early 2017, it declined sharply, possibly indicating increased interest expense or decreased earnings before interest and taxes. From mid-2018 onward, the ratio steadily increased from around 0.6 to above 0.8 by 2021, implying improved interest expense management or higher EBIT relative to interest costs.

EBIT Margin

The EBIT margin fluctuates significantly, with a general decline from 2016 to early 2018, reaching lows near 5% in early 2018, then recovering progressively to surpass 13% in late 2021. This trend suggests periods of margin compression possibly due to cost increases or pricing pressures, followed by operational improvements or cost controls enhancing earnings efficiency.

Asset Turnover

Asset turnover shows a gradual increase through the timeline, starting around 0.51 in 2016, dropping sharply by late 2017 to near 0.22, then steadily rising to approximately 0.37 by early 2022. This pattern indicates variations in the efficiency of asset utilization, with initial declines possibly due to asset acquisitions or slower sales growth, followed by more effective asset use contributing to revenue generation.

Financial Leverage

Financial leverage ratios decline modestly from over 3.2 in late 2016 to about 2.2-2.3 in 2021 and early 2022, demonstrating a trend toward reduced reliance on debt financing or increased equity base. This moderation in leverage may reflect a strategic approach to balance sheet risk or capital structure optimization.

Return on Equity (ROE)

ROE mirrors the volatility seen in other metrics, starting high at over 17% in late 2016, dropping sharply to below 2% by late 2017, before gradually rising to near 8% by late 2021. This pattern results from the combined effects of fluctuating profitability margins, leverage, and asset efficiency, indicating periods of diminished shareholder returns followed by recovery as operational and financial factors improve.

Overall, the data suggests that the company experienced stress in profitability and operational efficiency around 2017 and early 2018, followed by a phase of gradual recovery. Improvements in EBIT margin and asset turnover, coupled with prudent leverage management, contributed to a more stable and enhanced return on equity in later periods. However, the evident volatility highlights ongoing challenges in maintaining consistent profitability and expense control across quarters.

The financial analysis reveals notable fluctuations in Becton, Dickinson & Co.'s profitability and efficiency metrics over the examined periods.

Net Profit Margin (%)

The net profit margin demonstrated considerable volatility across the quarters, starting at 10.54% at the end of 2016 and dipping significantly in subsequent quarters, reaching a low of 0.34% in March 2018. Following this trough, there was a gradual recovery, with values stabilizing around 5% to 10% from late 2019 through early 2022. The margin peaked again at 10.33% in December 2021, indicating a return to stronger profitability levels.

Asset Turnover (ratio)

The asset turnover ratio depicted a general pattern of initial decline from 0.51 in late 2016 to a low of 0.22 in December 2017. Afterwards, the ratio showed a consistent upward trend, improving steadily to approximately 0.37 by early 2022. This suggests an enhancement in the company's asset utilization efficiency over time, after an initial period of decrease.

Return on Assets (ROA) (%)

The return on assets mirrored the trends observed in net profit margin and asset turnover, with an initial decline from 5.38% at the end of 2016 to a low of 0.08% in March 2018. Subsequent quarters evidenced a recovery phase, with ROA increasing to around 3.5% by early 2022. The gradual improvement in ROA reflects a strengthening ability to generate earnings from asset base.

Overall, the data suggests that the company experienced a period of reduced profitability and asset efficiency during 2017 through early 2018, followed by a recovery and moderate improvement in financial performance through 2021 and into 2022. The upward trends in asset turnover and return on assets are indicative of enhanced operational effectiveness, while the recovery in net profit margin suggests improved cost management or pricing power in recent periods.

The analysis of the quarterly financial data reveals several notable trends across key financial ratios from the end of 2016 through the first quarter of 2022.

Tax Burden

The Tax Burden ratio exhibited considerable variability throughout the periods under review. Initially, it remained relatively stable near 0.87-0.88, then spiked to 1.20 in the quarter ending June 2017, followed by fluctuations ranging between 0.27 and 1.39. After reaching a low point around mid-2018, the ratio stabilized mostly in the range of 0.89 to 0.98 from late 2020 onwards. The volatility in this ratio indicates fluctuating tax impacts on profitability across quarters.

Interest Burden

This ratio showed a generally fluctuating pattern with an initial level around 0.80, dropping sharply to as low as 0.05 in early 2018, indicating a substantial reduction in the impact of interest expenses during that period. Thereafter, the ratio mostly recovered and trended upward from 0.59 to 0.83, suggesting improved earnings before interest charges or reduced interest costs in recent quarters.

EBIT Margin

EBIT Margin percentages demonstrated significant variability, starting from a high of approximately 15.19% in late 2016 and declining sharply to single digits by mid-2017. The margin saw partial recovery with fluctuations between roughly 5% and 14.66% in subsequent quarters. Throughout 2020 and 2021, the EBIT Margin improved steadily, reaching a peak near 13.39% at the end of 2021 before a slight dip in early 2022. This suggests the company's operating profitability faced challenges but showed resilience and recovery over time.

Asset Turnover

The Asset Turnover ratio declined notably from about 0.51 in late 2016 to as low as 0.22 by the end of 2017, indicating decreased efficiency in generating revenue from assets. From 2018 onward, there was a gradual and consistent increase to around 0.37 by the end of 2021, which then stabilized. This recovery points to improved asset utilization or revenue generation relative to assets in recent years.

Return on Assets (ROA)

ROA showed a declining trend initially, falling from near 5.38% in late 2016 to a low of roughly 0.08% in early 2018. This reflects diminished profitability on asset base during that timeframe. Following this low, ROA experienced gradual improvement with fluctuations, rising steadily to above 3.5% by early 2022. This upward trajectory indicates recovery in asset-based profitability, potentially driven by improvements in operating margins and asset turnover as noted previously.

Overall, the financial indicators depict a period of performance challenges around 2017-2018, with declines in profitability, efficiency, and burden ratios. However, there is a clear pattern of gradual recovery and stabilization through 2020 and into early 2022, demonstrating enhanced operational efficiency and profitability.

Tax Burden

The tax burden ratio exhibited significant fluctuations over the analyzed periods. It initially remained close to or above 0.8 until mid-2017, then experienced a sharp decline during late 2017 and early 2018, reaching a low around 0.27. Following this, the ratio generally recovered, stabilizing near the 0.9 to 1.0 range from 2019 onward, with minor variations. This pattern suggests intermittent changes in effective tax rates or tax benefits during certain quarters, followed by a return to a more normalized tax burden level.

Interest Burden

The interest burden ratio showed variability throughout the timeline. Early periods in 2017 featured consistently moderate ratios near 0.8, but a notable dip occurred in the first quarter of 2018, reaching as low as 0.05, implying a substantial reduction in interest expenses or interest income impact. Subsequently, the ratio climbed back up and maintained a relatively stable range between 0.6 and 0.8 through the following years. In the last few quarters up to Q1 2022, a gradual, steady increase is visible, peaking close to 0.83, indicating improved operational earnings before accounting for interest effects.

EBIT Margin

The EBIT margin displayed a declining trend from late 2016 through early 2018, dropping from above 15% to around 5%. However, starting mid-2018, the margin began to recover and fluctuate in a range between roughly 8% and 14%. There is evidence of some volatility but a general upward trend from the lows of early 2018 to around 13% by late 2021, although there was a slight dip in specific quarters. These changes reflect variations in operating earnings relative to revenue, potentially influenced by cost structure changes or revenue growth dynamics.

Net Profit Margin

The net profit margin followed a somewhat similar pattern to the EBIT margin but with greater volatility and generally lower values. It declined sharply from over 10% in late 2016 to nearly 0.3% by Q1 2018, indicating a significant erosion in profitability during that period. Thereafter, the margin demonstrated a recovery phase, with fluctuations between 5% and 10%, approaching and surpassing 10% in some quarters through 2021. The net margin showed resilience and improvement post-2018, likely reflecting better control over costs, tax stabilization, and financing effects. The fluctuations, however, indicate ongoing challenges in sustaining consistent profitability.

Overall Insights

The financial ratios analyzed exhibit initial stress during the early 2017 to early 2018 period, characterized by sharp declines in profitability and changes in tax and interest burdens. Following this period, there is a general recovery and stabilization trend visible across all metrics through to early 2022, though with some volatility remaining. The improvements in EBIT and net profit margins suggest operational enhancements and financial management adjustments. The stabilization of tax and interest burdens further supports improved net profitability. Continued attention to cost control and efficient financial management appears critical for sustaining and enhancing profitability.