DuPont de Nemours Inc. (NYSE:DD)

Return on Assets (ROA)

The Return on Assets exhibited a declining trend over the analyzed periods. Initially, ROA was relatively high, peaking near 10.36% in mid-2016, but it experienced a steady decrease through 2017, reaching a low below 1% by the year's end. Following this, ROA showed a modest recovery during 2018, rising to slightly above 2% in the last quarter. However, in 2019, the ROA again declined, ending the year just below 1%. This pattern indicates a diminishing efficiency in asset utilization over the longer term, with brief periods of slight improvement.

Financial Leverage

The financial leverage ratio demonstrated some fluctuations but with a general downward trend from 2016 to 2019. In the first half of 2016, leverage was around 2.67 to 2.82, increasing slightly to over 3.0 by the end of 2016. Subsequently, there was a marked reduction during 2017, with leverage declining to approximately 1.9 and remaining close to this level through 2018 and 2019. The decrease in leverage suggests a reduction in the company's reliance on debt financing relative to equity over the period.

Return on Equity (ROE)

The Return on Equity followed a trend similar to that of ROA but displayed higher volatility and more pronounced decreases. ROE started at a peak above 29% in mid-2016 and decreased significantly throughout 2017, dropping to near 1.5% by the end of that year. A slight improvement was visible in 2018, where ROE rose to just above 4% at the end of the year, but the ratio declined again during 2019, ending close to 1.2%. The significant decline and subsequent low levels indicate challenges in generating shareholder value during the period, despite some recovery attempts.

Summary Insights

Overall, the company experienced a deterioration in key profitability metrics across the four-year span. Both ROA and ROE showed significant declines from strong profitability in early 2016 to much weaker returns by the end of 2019, reflecting decreasing efficiency in asset use and shareholder profitability. Concurrently, financial leverage decreased, indicating a lowering of debt relative to equity, possibly as a strategic de-risking measure. Despite slight recoveries observed in 2018, the financial health in terms of profitability remained muted by the end of the reported periods, suggesting persistent operational or market challenges.

Net Profit Margin

The net profit margin experienced a notable decline over the observed periods. Starting at 13.71% in the first quarter of 2016, it peaked at 18.31% in the second quarter of 2016 before entering a downward trend. By the end of 2017, the margin decreased significantly to around 2.34%. Some fluctuations occurred afterward, with marginal improvements in late 2018, reaching 4.47%, but this was followed by another decline in 2019, settling at approximately 2.31% by the last quarter. Overall, the margin indicates reduced profitability relative to sales over time.

Asset Turnover

Asset turnover showed variability with a general decline from 0.69 in early 2016 to a low of 0.28 in the third quarter of 2017. After this low point, the ratio exhibited a moderate recovery, rising to 0.47 by the fourth quarter of 2018. However, it again experienced volatility in 2019, peaking at 0.92 in mid-2019 before dropping sharply to 0.31 by the final quarter. These fluctuations suggest inconsistencies in efficiency regarding asset utilization for generating revenue.

Financial Leverage

Financial leverage ratios started at 2.67 in early 2016 and increased to 3.06 by the end of 2016, indicating a higher reliance on debt or borrowed funds. From 2017 onward, the leverage notably decreased, stabilizing around values between 1.69 and 2.05, reflecting a reduction in leverage and possibly a more conservative capital structure during that period.

Return on Equity (ROE)

ROE mirrored the trends seen in net profit margin, beginning at 25.24% in early 2016 and reaching a peak of 29.2% in the second quarter of 2016. Thereafter, it declined sharply to single digits by the end of 2017, reaching lows as brief as 1.46%. A slight recovery occurred at the end of 2018, up to 4.06%, but 2019 saw mostly low ROE values fluctuating between 1.22% and 3.53%, indicating diminished returns to shareholders over time.

Summary

The data reveals a general deterioration in profitability and efficiency metrics over the examined period. Profit margins and return on equity both declined significantly after mid-2016 and struggled to regain prior levels. Asset turnover also reflected inconsistency, hinting at less efficient asset use. A simultaneous reduction in financial leverage suggests a strategic shift towards lower debt levels. Overall, the trends point to challenges in maintaining profitability and operational efficiency during the specified quarters.

Tax Burden

The tax burden ratio exhibited variability throughout the observed periods. Starting at 0.83, it increased to a peak of 1.48 by the end of 2017 and then showed a general declining trend, reaching lows around 0.51 and 0.55 in the third and fourth quarters of 2019 before slightly rising to 0.78. This fluctuation indicates varying effective tax rates impacting net profitability over the periods.

Interest Burden

The interest burden ratio generally declined over time. It began at 0.90 and gradually decreased, with notable drops to 0.48 and 0.49 in the last quarter of 2017 and 2019, respectively. This suggests an increasing interest expense relative to earnings before interest and taxes, reducing overall operating profit retention.

EBIT Margin

EBIT margin showed a downward trend during the initial periods, dropping sharply from 22.74% in the second quarter of 2016 to an approximate low of 3.31% by the end of 2017. A moderate recovery appeared in subsequent quarters, peaking around 7.95% in the last quarter of 2018 before declining again to approximately 6.07% by the end of 2019. This highlights a significant decrease in operational efficiency and profitability within the timeline.

Asset Turnover

Asset turnover ratios fluctuated over the periods, starting at 0.69 and declining to approximately 0.28 in the third quarter of 2017. Subsequently, a steady rise occurred, reaching a peak of 0.92 in the third quarter of 2019, followed by a sharp decrease to 0.31 at the end of 2019. The general variability suggests changes in the company’s asset utilization efficiency.

Financial Leverage

Financial leverage remained relatively stable with a slight decreasing trend from about 3.06 in the last quarter of 2016 to approximately 1.69 towards the end of 2019. This indicates a gradual reduction in the company’s reliance on debt financing over time.

Return on Equity (ROE)

ROE demonstrated a significant decline from a high of 29.2% in the second quarter of 2016 to a low near 1.22% at the end of 2019. The decrease was marked by consistent downturns with minor recoveries, reflecting reduced profitability and returns to shareholders despite some improvement in asset turnover during late 2019.

Net Profit Margin

The net profit margin exhibited a declining trend overall during the period under review. Starting relatively high at 13.71% in the first quarter of 2016, it reached a peak of 18.31% in the second quarter of 2016. Subsequently, it experienced a sharp decline throughout 2017, bottoming out at 2.34% by the end of that year. During 2018, the margin showed modest fluctuations but remained low compared to earlier years, generally hovering between 2.37% and 4.47%. In 2019, the margin further decreased, falling below 2% in three quarters and ending the year at 2.31%. This downward trajectory suggests diminishing profitability on sales over time.

Asset Turnover

Asset turnover ratios showed considerable variability across the quarters. Initially, the ratio was moderate, around 0.69 in early 2016, but declined to a low of 0.28 in the third quarter of 2017. This marked reduction indicates decreased efficiency in using assets to generate sales during that period. However, a notable recovery occurred from late 2017 through mid-2019, reaching a peak of 0.92 in the second quarter of 2019, implying improved asset utilization. Toward the final quarter of 2019, asset turnover decreased again to 0.31, indicating a potential setback in asset efficiency.

Return on Assets (ROA)

The return on assets mirrored the trends in net profit margin and asset turnover, showing overall decline with intermittent improvements. Starting at 9.44% in early 2016, ROA peaked at 10.36% in the second quarter of 2016 before gradually decreasing. By the end of 2017, ROA had dropped to under 1%, indicating reduced profitability relative to asset base. Although there was a slight improvement during 2018, with ROA reaching just above 2%, the ratio failed to regain its prior levels. The year 2019 showed further decline, ending at 0.72%, the lowest point in the dataset. This declining ROA trend suggests weakening overall asset profitability over the period.

Overall Insights

The examined financial ratios collectively reveal a weakening performance profile from 2016 through 2019. Profitability measures such as net profit margin and ROA have declined significantly, indicating challenges in sustaining profit levels and in generating returns from assets. The asset turnover ratio’s large fluctuations imply inconsistent efficiency in asset use, with temporary recoveries followed by steep declines. These trends highlight potential operational or market pressures impacting the ability to maintain profitability and effective asset management during the analyzed timeframe.

The analysis of the financial ratios over the specified periods reveals several noteworthy trends and patterns.

Tax Burden

The tax burden ratio exhibits considerable volatility across the quarters, with values fluctuating between 0.51 and 1.48. There is a peak in the fourth quarter of 2017, reaching 1.48, followed by a decline and subsequent fluctuations during 2018 and 2019. This variability indicates changes in tax expenses relative to earnings before tax, suggesting shifts in tax policies, benefits, or non-recurring tax items during certain quarters.

Interest Burden

The interest burden ratio shows a general declining trend over the periods, starting near 0.9 and declining to values below 0.5 in the last quarters of 2019. This downward trend points to increasing interest expenses relative to EBIT, indicating either rising debt costs or higher leverage, which exerts additional pressure on operating income retention after interest.

EBIT Margin

The EBIT margin percentage starts relatively high in early 2016, peaking notably in the second quarter of 2016 at 22.74%, then declines substantially and reaches a low around 3.31% in the last quarter of 2017. A moderate recovery occurs afterward, with margins increasing but remaining below the earlier highs, stabilizing around 5-7% towards the end of 2019. This pattern reflects challenges in profitability at the operating level, potentially influenced by market conditions, cost structures, or competitive pressures.

Asset Turnover

Asset turnover ratios fluctuate throughout the periods with a marked dip in the latter half of 2017, falling below 0.3, before recovering somewhat in 2019 but remaining inconsistent. The highest asset turnover occurs in the third quarter of 2019 at 0.92, indicating a temporary improvement in asset usage efficiency, but this is not sustained. Overall, the variable asset turnover suggests fluctuating operational efficiency or changes in asset base size impacting revenue generation capability.

Return on Assets (ROA)

ROA percentage declines from strong double-digit values in early 2016 to under 1% across several quarters in 2017 and beyond. There is a slight resurgence towards 2% in early 2018, but the values generally remain low and fluctuate marginally between roughly 0.7% and 2%. This decline and low sustainability demonstrate reduced overall profitability relative to assets employed, pointing to challenges in effectively generating returns.

In summary, the data reflects a period of deteriorating profitability and efficiency, with significant strain on margins and returns on assets. The increasing interest burden alongside fluctuating tax burden affects net profitability measures. Asset utilization shows inconsistency, further contributing to overall reduced returns in recent periods. The trends suggest that the company experienced operational and financial challenges during these quarters, which affected its ability to maintain historical profitability levels.

Tax Burden

The tax burden ratio exhibited noticeable fluctuations over the examined quarters. Starting at 0.83 in early 2016, it increased gradually, reaching a peak of 1.48 by the end of 2017, indicating periods where taxes may have exceeded pre-tax profits or adjustments impacted this ratio significantly. After this peak, there was a general decline to around 0.51 in mid-2019, with a slight recovery to 0.78 by the end of 2019. This volatility suggests considerable variability in the company’s effective tax rate or tax-related accounting effects throughout the periods.

Interest Burden

The interest burden ratio showed a gradual decreasing trend over the quarters. It began near 0.9 in the first quarter of 2016, with a relatively steady decline through 2017 and a sharper drop in late 2017 and 2018, hitting a low point of 0.48 at the end of 2017. Through 2018 and 2019, it remained below 0.8 and continued dropping to approximately 0.49 by the last quarter of 2019. This trend may reflect increasing interest expenses or borrowing costs relative to earnings before interest and taxes, progressively pressuring operational profitability.

EBIT Margin

The EBIT margin displayed significant volatility, starting high at 18.51% in early 2016 before peaking at 22.74% in Q2 2016. It then declined sharply, reaching a low point around 3.31% by the end of 2017, indicating a challenging period for operational profitability. A modest improvement followed, climbing to close to 8% by the end of 2018. However, this was followed by a decrease again in 2019, finishing the year near 6%. The pattern suggests cyclical challenges impacting earnings before interest and taxes, with periods of recovery interspersed.

Net Profit Margin

The net profit margin trend is consistent with the movements in EBIT margin but reflects the compounded effect of taxes and interest. Starting at 13.71% in early 2016, it rose to a peak of 18.31% in mid-2016 and then sharply declined to around 2.34% by the end of 2017. Subsequent quarters showed marginal improvements, with values fluctuating between approximately 1.4% and 4.5% during 2018 and 2019, ultimately closing near 2.31%. This downward pressure and volatility imply the company faced sustained challenges in converting revenue to net earnings, likely influenced by rising costs and fluctuating tax expenses.