Fidelity National Information Services Inc. (NYSE:FIS)

The analysis of the financial ratios over the five-year period reveals notable fluctuations and an overall deterioration in key performance metrics in the most recent year.

Return on Assets (ROA)

The ROA started at a positive 3.56% in 2018 but sharply declined to a low of 0.19% by 2020, indicating a decrease in asset profitability. There was a slight recovery to 0.5% in 2021; however, the ratio dramatically dropped to -26.42% in 2022. This negative and substantial decline suggests significant operational challenges or extraordinary losses affecting asset efficiency during the last year.

Financial Leverage

Financial leverage decreased noticeably from 2.33 in 2018 to 1.7 in 2019 and remained relatively stable through 2021. In 2022, leverage increased back to 2.32, nearly matching the 2018 level. This pattern indicates a period of deleveraging or reduction in debt relative to equity from 2018 to 2021, followed by renewed reliance on financial leverage in 2022. The increase in leverage alongside deteriorating returns may suggest increased financial risk during the latest period.

Return on Equity (ROE)

ROE declined sharply from 8.28% in 2018 to a marginal 0.32% in 2020, reflecting a significant reduction in shareholder profitability. Although there was a slight improvement to 0.88% in 2021, ROE plunged to -61.43% in 2022, indicating a severe loss in equity value and a substantial negative impact on shareholder returns. This extreme decline corresponds with the trends observed in ROA and suggests a deteriorating financial performance and possibly critical underlying operational or market issues in 2022.

Overall, the data indicates that the company experienced a progressive decline in profitability from 2018 through 2020, with minor recovery in 2021. However, the financial results for 2022 demonstrate a severe downturn, characterized by substantial losses and increased financial leverage, which may raise concerns about the company’s financial stability and operational effectiveness during that period.

Net Profit Margin

The net profit margin exhibited a significant decline over the period analyzed. Starting at 10.04% in 2018, it dropped sharply to 2.88% in 2019 and further decreased to 1.26% in 2020. A slight improvement to 3% was observed in 2021; however, the margin deteriorated drastically to -115.09% in 2022, indicating a substantial loss during that year.

Asset Turnover

Asset turnover showed a downward trend from 0.35 in 2018 to 0.12 in 2019, signifying reduced efficiency in using assets to generate revenue. The metric demonstrated a gradual recovery from 0.15 in 2020 to 0.17 in 2021, and further increased to 0.23 in 2022, suggesting improvements in asset utilization over the last two years of the period.

Financial Leverage

Financial leverage decreased from 2.33 in 2018 to 1.7 in 2019 and remained stable at 1.7 in 2020. There was a slight increase to 1.75 in 2021, followed by a more substantial rise to 2.32 in 2022. This indicates a pattern of initially reducing leverage followed by renewed reliance on debt or liabilities to finance assets toward the end of the period.

Return on Equity (ROE)

ROE witnessed a pronounced decline, starting at 8.28% in 2018 and diminishing sharply to 0.6% in 2019 and further to 0.32% in 2020, reflecting poor profitability relative to shareholders' equity. A modest recovery to 0.88% occurred in 2021, but the ratio plummeted to -61.43% in 2022, aligning with the negative net profit margin and indicating significant losses impacting shareholder returns.

Tax Burden

The tax burden ratio shows a declining trend from 0.80 in 2018 to 0.53 in 2021, indicating a decreasing proportion of earnings paid as taxes over this period. The data for 2022 is not available, preventing further trend analysis for that year.

Interest Burden

The interest burden fluctuates notably, starting at 0.77 in 2018, dropping sharply to 0.51 in 2019 and further to 0.43 in 2020, before rebounding to 0.78 in 2021. This suggests variable impact of interest expenses on earnings across these years, with 2020 presenting the highest burden reduction. Data for 2022 is missing.

EBIT Margin

The EBIT margin exhibits a consistent decline from 16.24% in 2018 to a low of 4.72% in 2020, followed by a slight recovery to 7.23% in 2021. However, 2022 shows a significant negative figure of -110.43%, indicating a substantial operating loss or exceptional items severely impacting operating profitability.

Asset Turnover

Asset turnover shows generally low values, indicating limited revenue generation from assets, with a downward trend from 0.35 in 2018 to 0.12 in 2019. It then slightly increases over the next two years, reaching 0.23 in 2022, suggesting minor improvement in asset utilization efficiency after a period of decline.

Financial Leverage

Financial leverage decreases from 2.33 in 2018 to 1.70 in 2019 and remains relatively stable around that level through 2021. It then returns to 2.32 in 2022, indicating a fluctuation in the company’s reliance on debt financing, with increased leverage observed in the latest year.

Return on Equity (ROE)

ROE experiences a sharp decline from 8.28% in 2018 to near zero levels in 2019 and 2020 (0.6% and 0.32%, respectively), with a slight recovery to 0.88% in 2021. The most recent figure for 2022 is strongly negative at -61.43%, signifying a significant deterioration in shareholder value and profitability.

The financial ratios reveal notable fluctuations and trends in profitability, asset utilization, and overall returns over the five-year span.

Net Profit Margin

This ratio demonstrates a significant decline from 10.04% in 2018 to a marginal 1.26% in 2020, briefly recovering to 3% in 2021 before plummeting dramatically to -115.09% in 2022. The negative value in 2022 indicates a substantial loss relative to revenue, highlighting severe profitability challenges during that year.

Asset Turnover

The asset turnover ratio shows a downward trend from 0.35 in 2018 to a low of 0.12 in 2019, followed by a gradual recovery to 0.23 by 2022. This suggests a reduction in the efficiency with which assets were used to generate sales up to 2019, with improving utilization in subsequent years, though it remains below the initial 2018 level.

Return on Assets (ROA)

ROA similarly exhibits a sharp decline from 3.56% in 2018 to 0.19% in 2020, indicating poor profitability relative to assets during that period. A slight improvement to 0.5% in 2021 precedes a drastic fall to -26.42% in 2022, consistent with the significant losses indicated by the net profit margin. This confirms the deteriorated asset profitability and overall financial distress experienced in the final year.

Overall, the data indicates that the company faced substantial profitability challenges beginning in 2019, with temporary stability in 2021 followed by significant financial setbacks in 2022, as reflected in negative profitability measures and a continued struggle with asset efficiency despite some recovery. These trends suggest a need for strategic and operational reassessment to address the underlying issues impacting financial performance.

Tax Burden

The tax burden exhibited a consistent downward trend from 0.80 in 2018 to 0.53 in 2021, indicating a reduction in the proportion of earnings paid as tax over these years. Data for 2022 is not available, hence no conclusion can be drawn for that period.

Interest Burden

The interest burden showed volatility over the years. It decreased sharply from 0.77 in 2018 to 0.43 in 2020, suggesting improved management of interest expenses relative to earnings. However, in 2021 there was a significant increase to 0.78, indicating higher interest expenses or reduced earnings before interest and taxes. Data for 2022 is missing.

EBIT Margin

The EBIT margin displayed a declining trend from 16.24% in 2018 to 4.72% in 2020, followed by a mild recovery to 7.23% in 2021. Notably, there was a drastic negative drop to -110.43% in 2022, signaling a substantial operating loss relative to revenue for that year.

Asset Turnover

The asset turnover ratio decreased significantly from 0.35 in 2018 to 0.12 in 2019, then gradually increased to 0.23 by 2022. This pattern suggests an initial decline in asset utilization efficiency that slowly improved over time but remained below the initial level.

Return on Assets (ROA)

The ROA sharply declined from 3.56% in 2018 to 0.19% in 2020, indicating a diminishing return on the assets employed in the business. A minor recovery to 0.5% occurred in 2021, but in 2022, ROA dropped dramatically into negative territory at -26.42%, reflecting significant losses relative to the asset base.

Tax Burden Ratio

The tax burden ratio demonstrates a consistent downward trend from 0.80 in 2018 to 0.53 in 2021. This suggests a progressive reduction in the proportion of earnings paid as tax over the observed period until 2021. Data for 2022 is not provided.

Interest Burden Ratio

The interest burden ratio exhibits volatility, starting at 0.77 in 2018, dropping sharply to 0.43 in 2020, and then rising back to 0.78 in 2021. This fluctuation indicates uneven trends in interest expenses relative to earnings before interest and taxes during these years.

EBIT Margin

The EBIT margin significantly declines from 16.24% in 2018 to low single digits in 2020 and 2021, specifically 4.72% and 7.23%, respectively. However, an extraordinary negative figure of -110.43% is observed in 2022, indicating a substantial operating loss relative to sales for that year.

Net Profit Margin

Net profit margin shows a sharp decrease from 10.04% in 2018 down to 1.26% in 2020, followed by a slight improvement to 3.00% in 2021. Similar to the EBIT margin, net profit margin turns markedly negative in 2022 at -115.09%, pointing to a significant net loss relative to revenues.

Overall Profitability Trends

Both EBIT and net profit margins indicate a deterioration in profitability over the five-year span, culminating in substantial losses in 2022. Coupled with the fluctuating interest burden, the data suggests challenges in managing operating and financial expenses effectively, especially in the last reported year.