Fidelity National Information Services Inc. (NYSE:FIS)

Return on Assets (ROA) Trend

The Return on Assets shows an initial positive trend starting from March 2019 with a peak at 3.56%. However, it exhibits a sharp decline thereafter, reaching near zero and negative values towards late 2020. The ratio experiences minor fluctuations during 2021 and early 2022, maintaining slightly positive figures around 0.5% to 1.2%. A significant negative deterioration is observed in the first quarters of 2023, with ROA plummeting drastically to -26.42% and -27.34%. This indicates a period of reduced asset profitability culminating in severe losses in recent periods.

Financial Leverage Ratio Trend

Financial leverage ratios start around 2.3 in early 2018 and fluctuate moderately in the following quarters. Notably, a spike to 3.29 is seen in June 2019, followed by a sharp decline to approximately 1.7, where it remains relatively stable through 2020 and most of 2021. Slight increases occur towards 2022, rising just above 1.7, and a more definitive upward movement appears in early 2023, jumping to approximately 2.3 and 2.25. This suggests variability in the company's use of debt relative to equity, with a recent trend toward increased leverage after a period of stability.

Return on Equity (ROE) Trend

Return on Equity follows a partly similar trajectory to ROA, starting with positive values in 2019 around 8%, followed by a substantial decline reaching close to zero and even negative values near the end of 2020. The ratio fluctuates with small positive returns during 2021 and early 2022, generally staying below 2%. The most striking observation is the massive drop in the first quarter of 2023, where ROE collapses drastically to -61.43% and -61.63%, indicating severe losses affecting shareholder equity.

Overall Financial Performance Insights

The data reveals a period of weakening profitability starting in late 2019 into 2020, with both ROA and ROE declining sharply. Despite some recovery and stabilization in mid to late 2021 and 2022, profitability remains at low levels. The increased financial leverage in early 2023 alongside plummeting returns on assets and equity suggests rising financial risk and deteriorating operational performance. The marked negative returns in the first quarters of 2023 call for attention to underlying causes, as they signal substantial financial distress.

Net Profit Margin

The net profit margin shows a declining trend from early 2019, beginning at 10.04% in March 2019 and falling steadily to negative values by the end of 2020, reaching -0.83% in December 2020. A gradual recovery is observed through 2021 and into early 2022, with the margin rising to a peak of 6.47% in September 2022. However, a pronounced and irregular decline occurs afterward, with the margin plunging drastically to -115.09% by March 2023, indicating significant losses in the most recent quarter.

Asset Turnover

Asset turnover demonstrates relative stability with a slight increase over the period analyzed. Starting around 0.35 in early 2019, it decreases noticeably in late 2019 to approximately 0.11, followed by a gradual and consistent increase through 2020 and 2021. By early 2023, asset turnover improves further, reaching 0.24, suggesting a modest enhancement in the efficiency of asset utilization over time despite some short-term fluctuations.

Financial Leverage

Financial leverage fluctuates moderately, beginning slightly above 2.3 in early 2018, with a notable peak at 3.29 in June 2019, followed by a sharp decline to about 1.7 by late 2019. It maintains relative consistency between 1.7 and 1.75 throughout 2020 and 2021. From late 2022 onward, leverage escalates again, rising above 2.3 by March 2023. These variations suggest changing reliance on debt or equity financing across the periods, with increased leverage evident in the most recent quarter.

Return on Equity (ROE)

ROE displays a downward trend starting mid-2019, dropping from 8.28% in March 2019 to negative values by the end of 2020, with a low of -0.21% in December 2020. A slow recovery occurs through 2021 and early 2022, peaking at 2.07% in December 2022. Similar to net profit margin, ROE encounters a sharp decline thereafter, falling drastically to -61.43% by March 2023. This substantial negative return indicates adverse performance impacting shareholder equity in the latest quarter.

The analysis of the quarterly financial ratios reveals distinct patterns in profitability, efficiency, and asset utilization over the observed periods.

Net Profit Margin (%)

The net profit margin began to be reported from March 31, 2019, showing a declining trend from 10.04% in Q1 2019 to 8.23% by Q4 2019. This downtrend accelerated sharply in 2020, with a substantial drop to negative margins by the fourth quarter of 2020 (-0.83%), indicating the occurrence of losses during this period. The margin showed some volatility in 2021, fluctuating between losses and modest profits, before improving steadily from Q1 2022 onward, peaking at 6.47% by Q4 2022. However, in the first quarter of 2023, the margin exhibited an extreme negative value (-115.09%), suggesting either an extraordinary loss or potentially an anomaly in reporting that warrants further investigation.

Asset Turnover (ratio)

Starting mid-2019, asset turnover ratios were recorded. Initially, this ratio declined from 0.35 in Q2 2019 to 0.11 in Q4 2019, indicating a reduction in efficiency in generating sales from assets. From 2020 forward, the ratio stabilized and gradually improved, reaching 0.24 by Q1 2023. This gently upward trajectory suggests incremental enhancements in asset use efficiency over time.

Return on Assets (ROA) (%)

The ROA mirrored the net profit margin trends, with early values at 3.56% in Q1 2019, followed by a sharp decrease to negative territory by the end of 2020 (-0.13%). Similar to the net margin, ROA fluctuated marginally around zero through 2021 but demonstrated gradual recovery throughout 2022, ending at 1.2% by Q4 2022. The first quarter of 2023 brought a significant negative spike (-26.42%), aligning with the drastic net margin deterioration and pointing toward a severe decline in asset profitability during this quarter.

Overall, the company experienced a period of declining profitability and asset efficiency beginning in 2019, reaching its lowest points around late 2020. Following this, there was a period of recovery extending through 2022. However, the extreme negative values observed in the first quarter of 2023 across both profitability and return metrics suggest an exceptional event or reporting issue affecting financial performance that requires deeper examination.