Humana Inc. (NYSE:HUM)

Return on Assets (ROA)

The Return on Assets shows a declining trend over the five-year period. It started at 9.31% in 2019, then increased slightly to 9.63% in 2020, but subsequently declined steadily to 6.61% in 2021, 6.52% in 2022, and further to 5.29% in 2023. This indicates a reduction in the company's efficiency in generating profits from its assets over time.

Financial Leverage

Financial Leverage has exhibited a gradual increase from 2.42 in 2019 to 2.89 in 2023. This upward trend suggests that the company has been increasing its use of debt relative to equity in financing its assets, potentially increasing financial risk.

Return on Equity (ROE)

Return on Equity peaked at 24.53% in 2020, up from 22.49% in 2019, but then declined significantly in the following years to 18.24% in 2021, 18.33% in 2022, and further to 15.31% in 2023. This pattern mirrors the decline in ROA, indicating diminishing profitability for shareholders. Despite the increased financial leverage, the ROE decreased, pointing to less effective use of increased debt in enhancing shareholder returns.

Net Profit Margin

The net profit margin shows a declining trend over the five-year period. It decreased from 4.2% in 2019 to 2.36% in 2023, indicating a continuous reduction in profitability relative to revenue.

Asset Turnover

The asset turnover ratio fluctuated but showed overall stability with minor variations. It decreased from 2.21 in 2019 to a low of 1.87 in 2021, then increased again to 2.24 by 2023, suggesting some improvement in asset utilization after a dip.

Financial Leverage

The financial leverage ratio steadily increased from 2.42 in 2019 to 2.89 in 2023. This indicates a gradual rise in the use of debt or liabilities relative to equity over time.

Return on Equity (ROE)

ROE demonstrated a peak in 2020 at 24.53% before declining significantly to 15.31% by 2023. This decline reflects reduced effectiveness in generating profit from shareholders' equity despite higher financial leverage.

The analysis of the financial ratios over the five-year period demonstrates several notable trends in the company's financial performance and efficiency.

Tax Burden

The tax burden ratio fluctuated, declining from 0.78 in 2019 to 0.72 in 2020, then rising sharply to 0.86 in 2021, followed by a decrease to 0.79 in 2022 and further to 0.75 in 2023. This indicates variability in the effective tax rate impacting net income, with a peak tax impact observed in 2021.

Interest Burden

The interest burden ratio exhibited a slight downward trend from 0.93 in 2019 to 0.87 in 2023, suggesting a gradual increase in interest expenses relative to earnings before interest and taxes (EBIT), which could indicate elevated financial costs or leverage utilization.

EBIT Margin

The EBIT margin showed a declining trend over the period, starting at 5.77% in 2019, peaking slightly at 6.52% in 2020, then decreasing consistently to 3.63% by 2023. This reflects diminishing operating profitability relative to revenue, signaling potential cost pressures or revenue challenges.

Asset Turnover

The asset turnover ratio decreased from 2.21 in 2019 to 1.87 in 2021, indicating reduced efficiency in generating revenue from assets, but rebounded to 2.24 in 2023, surpassing the initial level. This suggests improvements in asset utilization in the most recent periods.

Financial Leverage

Financial leverage steadily increased from 2.42 in 2019 to 2.89 in 2023, indicating a growing reliance on debt or other liabilities to finance assets. This trend highlights a heightened risk profile related to capital structure management.

Return on Equity (ROE)

The ROE declined from 22.49% in 2019 to 15.31% in 2023. Despite minor stabilization in 2022, the overall downward trajectory reflects reduced effectiveness in generating shareholder returns, likely influenced by decreasing operating margins and increasing financial leverage.

In summary, the company experienced increased financial leverage and fluctuating tax burdens while facing declining operating profitability and shareholder returns over the analyzed period. Efficiency in asset utilization recovered in later years, partially offsetting other negative trends. The combined effect resulted in a diminishing return on equity, warranting attention to cost management, debt levels, and operational efficiency.

Net Profit Margin

The net profit margin showed a declining trend over the analyzed period. Starting at 4.2% in 2019, it increased slightly to 4.43% in 2020 but thereafter experienced a steady decrease, reaching 2.36% by the end of 2023. This indicates a reduction in profitability relative to revenue over the years, particularly after 2020.

Asset Turnover

The asset turnover ratio exhibited some fluctuations but remained relatively stable overall. It began at 2.21 in 2019, decreased modestly to 2.17 in 2020, and fell further to 1.87 in 2021. However, there was a recovery in 2022 and 2023, with ratios rising to 2.15 and 2.24 respectively, suggesting improved efficiency in asset utilization in the later years.

Return on Assets (ROA)

Return on assets showed a notable downward trend across the period. Starting at 9.31% in 2019, it increased slightly to a peak of 9.63% in 2020 but then declined significantly, dropping to 6.61% in 2021, stabilizing somewhat at 6.52% in 2022, and further falling to 5.29% in 2023. This decline reflects reduced overall profitability generated from the company’s asset base.

Overall Observations

The data reveals that despite some recovery in asset turnover in recent years, the company has experienced consistent declines in profitability measures such as net profit margin and return on assets since 2020. This combination suggests increased challenges in converting revenue and assets into profits effectively. The decline in profit margin may be due to rising costs or pricing pressures, while the partial rebound in asset turnover indicates efforts to improve asset efficiency, though these have not yet fully translated into improved profitability.

The financial data reveals several notable trends over the five-year period under review. The tax burden ratio fluctuates, showing a decline from 0.78 in 2019 to a low of 0.72 in 2020, followed by an increase to 0.86 in 2021, before decreasing gradually to 0.75 by 2023. This suggests variability in the company's effective tax rate or tax management strategies across the years.

The interest burden ratio remains relatively stable but exhibits a slight downward trend from 0.93 in 2019 to 0.87 in 2023. This indicates a modest improvement in managing interest expenses relative to earnings before interest and taxes (EBIT), which may benefit net profitability.

The EBIT margin shows a clear declining trend throughout the period. Starting at 5.77% in 2019, it peaks slightly at 6.52% in 2020, then steadily decreases to 3.63% by 2023. This decline in EBIT margin signals reduced operational profitability, which could be due to increased costs or decreased pricing power.

Asset turnover experiences some variability. It decreases from 2.21 in 2019 to 1.87 in 2021, indicating less efficient use of assets to generate revenue during that period. However, asset turnover improves again to 2.24 by 2023, surpassing the initial 2019 level, which reflects enhanced efficiency in asset utilization in recent years.

Return on assets (ROA) declines consistently from 9.31% in 2019 to 5.29% in 2023. This downward trend is aligned with the falling EBIT margin and suggests reduced overall profitability relative to the company's total asset base. The decline is somewhat mitigated by the improvement in asset turnover after 2021 but remains significant overall.

Tax Burden

Fluctuates with a low in 2020 and a peak in 2021, then decreases gradually.

Interest Burden

Relatively stable with a slight improving trend indicating better interest expense management.

EBIT Margin

Declines steadily after a brief increase in 2020, indicating reduced operational profitability.

Asset Turnover

Declines until 2021 but improves afterward, surpassing the starting level, showing improved asset efficiency.

Return on Assets (ROA)

Shows a consistent decrease over the five years, reflecting reduced profitability despite efficiency gains in asset use.

The financial data reveals several notable trends over the five-year period ending December 31, 2023.

Tax Burden Ratio

The tax burden ratio demonstrates some fluctuations, starting at 0.78 in 2019, dropping to 0.72 in 2020, peaking at 0.86 in 2021, and then gradually declining to 0.79 in 2022 and 0.75 in 2023. This indicates varying effective tax impacts on profits, with the highest tax burden observed in 2021 followed by a downward trend.

Interest Burden Ratio

The interest burden ratio shows a generally declining trend over the period. It begins at 0.93 in 2019, remains relatively stable at 0.94 in 2020, then decreases steadily to 0.91 in 2021, 0.90 in 2022, and 0.87 in 2023. This suggests a gradual reduction in interest expenses relative to earnings before interest and taxes (EBIT), potentially reflecting improved financial leverage or cost management.

EBIT Margin (%)

The EBIT margin exhibits a declining trend throughout the period. Starting at 5.77% in 2019, it rises slightly to 6.52% in 2020, but then declines notably to 4.52% in 2021, followed by a gradual decrease to 4.29% in 2022 and 3.63% in 2023. This signifies a reduction in operating profitability as a percentage of revenues over the recent years.

Net Profit Margin (%)

The net profit margin follows a downward trajectory over the years. From 4.20% in 2019, it increases slightly to 4.43% in 2020 but subsequently declines to 3.54% in 2021, 3.03% in 2022, and further to 2.36% in 2023. This decreasing trend indicates diminishing overall profitability after accounting for all expenses, taxes, and interest costs.

Overall, the information reflects a pattern of declining profitability margins alongside a relatively improving interest burden. The fluctuating tax burden impacts net outcomes but the general reduction in EBIT and net profit margins could suggest increased cost pressures or challenges in maintaining operating efficiency over the period analyzed.