DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
Quarterly Data
Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.
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- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Analysis of Profitability Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Price to Operating Profit (P/OP) since 2005
- Analysis of Revenues
- Analysis of Debt
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Two-Component Disaggregation of ROE
Lowe’s Cos. Inc., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2025-10-31), 10-Q (reporting date: 2025-08-01), 10-Q (reporting date: 2025-05-02), 10-K (reporting date: 2025-01-31), 10-Q (reporting date: 2024-11-01), 10-Q (reporting date: 2024-08-02), 10-Q (reporting date: 2024-05-03), 10-K (reporting date: 2024-02-02), 10-Q (reporting date: 2023-11-03), 10-Q (reporting date: 2023-08-04), 10-Q (reporting date: 2023-05-05), 10-K (reporting date: 2023-02-03), 10-Q (reporting date: 2022-10-28), 10-Q (reporting date: 2022-07-29), 10-Q (reporting date: 2022-04-29), 10-K (reporting date: 2022-01-28), 10-Q (reporting date: 2021-10-29), 10-Q (reporting date: 2021-07-30), 10-Q (reporting date: 2021-04-30), 10-K (reporting date: 2021-01-29), 10-Q (reporting date: 2020-10-30), 10-Q (reporting date: 2020-07-31), 10-Q (reporting date: 2020-05-01).
- Return on Assets (ROA)
- The return on assets shows a generally positive trend from May 2020 through early 2024, increasing from 9.98% to a peak of 18.49% in February 2024. This indicates improved efficiency in generating profits from assets over this period. A notable rise is seen between May 2020 and January 2022, where ROA climbs from approximately 10% to nearly 19%. Subsequent periods, from February 2024 onward, show a gradual decline, with ROA decreasing to 12.68% by October 2025. This suggests a reduction in asset profitability in the later quarters examined.
- Financial Leverage
- Financial leverage data is only available for the first five quarters, showing significant volatility. The ratio drops from 26.71 in May 2020 to 11.88 in July 2020, followed by a slight increase to 12.49 in October 2020. A sharp spike occurs in January 2021 and April 2021, with leverage rising dramatically to 32.52 and then an exceptionally high 115.06, respectively. Lack of data post-April 2021 prevents further trend analysis, but the initial fluctuations suggest changing capital structure or debt levels during this period.
- Return on Equity (ROE)
- The return on equity mirrors the initial volatility seen in financial leverage, with extremely high and fluctuating values in the available data from May 2020 to April 2021. ROE starts at 266.43%, decreases to around 131% in mid-2020, then surges to 406.05% in January 2021 and skyrockets to 1532.36% by April 2021. This extraordinary increase may be linked to leverage effects or extraordinary items and suggests very high returns to shareholders during this timeframe. Data beyond April 2021 is missing, limiting further longitudinal analysis.
Three-Component Disaggregation of ROE
Lowe’s Cos. Inc., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2025-10-31), 10-Q (reporting date: 2025-08-01), 10-Q (reporting date: 2025-05-02), 10-K (reporting date: 2025-01-31), 10-Q (reporting date: 2024-11-01), 10-Q (reporting date: 2024-08-02), 10-Q (reporting date: 2024-05-03), 10-K (reporting date: 2024-02-02), 10-Q (reporting date: 2023-11-03), 10-Q (reporting date: 2023-08-04), 10-Q (reporting date: 2023-05-05), 10-K (reporting date: 2023-02-03), 10-Q (reporting date: 2022-10-28), 10-Q (reporting date: 2022-07-29), 10-Q (reporting date: 2022-04-29), 10-K (reporting date: 2022-01-28), 10-Q (reporting date: 2021-10-29), 10-Q (reporting date: 2021-07-30), 10-Q (reporting date: 2021-04-30), 10-K (reporting date: 2021-01-29), 10-Q (reporting date: 2020-10-30), 10-Q (reporting date: 2020-07-31), 10-Q (reporting date: 2020-05-01).
- Net Profit Margin
- The net profit margin exhibits a general upward trend from May 2020 through mid-2022, starting at 6.17% and peaking around 8.85% in April 2022. There is a notable decline following this peak, dropping to approximately 6.48% by November 2023. Subsequently, the margin recovers somewhat, reaching levels slightly above 8.3% by early 2025, before a minor decline towards 8.05% at the end of the observed period. This indicates fluctuations in profitability with an overall positive trajectory but subject to periodic contraction.
- Asset Turnover
- The asset turnover ratio shows variability but remains generally stable with a slight downward tendency towards the latter periods. Initially, values range from approximately 1.55 to 2.16 in early 2022, reflecting strong efficiency in asset utilization. After this peak, turnover ratios gradually decline to about 1.58 by October 2025. This suggests a reduction in the efficiency of asset use over time, possibly indicating capacity expansion, changes in sales mix, or other operational factors affecting asset productivity.
- Financial Leverage
- Financial leverage data is fragmented and limited to early periods, showing significant volatility. It starts at an extremely high 26.71 ratio in May 2020, drops sharply to 11.88 in July 2020, remains around 12.49 in October 2020, and spikes to 32.52 in January 2021 before an exceptional peak of 115.06 in April 2021. These large fluctuations suggest periods of dramatic changes in the company's capital structure or accounting methods during this interval. Absence of data beyond this point precludes trend analysis for subsequent periods.
- Return on Equity (ROE)
- ROE shows extremely high and volatile values in the initial periods, ranging from approximately 131% to over 1500% between May 2020 and April 2021. These extraordinary figures imply exceptional returns or possible accounting peculiarities during that timeframe. The lack of data following April 2021 restricts further analysis of ROE trends in the long term.
Two-Component Disaggregation of ROA
Lowe’s Cos. Inc., decomposition of ROA (quarterly data)
Based on: 10-Q (reporting date: 2025-10-31), 10-Q (reporting date: 2025-08-01), 10-Q (reporting date: 2025-05-02), 10-K (reporting date: 2025-01-31), 10-Q (reporting date: 2024-11-01), 10-Q (reporting date: 2024-08-02), 10-Q (reporting date: 2024-05-03), 10-K (reporting date: 2024-02-02), 10-Q (reporting date: 2023-11-03), 10-Q (reporting date: 2023-08-04), 10-Q (reporting date: 2023-05-05), 10-K (reporting date: 2023-02-03), 10-Q (reporting date: 2022-10-28), 10-Q (reporting date: 2022-07-29), 10-Q (reporting date: 2022-04-29), 10-K (reporting date: 2022-01-28), 10-Q (reporting date: 2021-10-29), 10-Q (reporting date: 2021-07-30), 10-Q (reporting date: 2021-04-30), 10-K (reporting date: 2021-01-29), 10-Q (reporting date: 2020-10-30), 10-Q (reporting date: 2020-07-31), 10-Q (reporting date: 2020-05-01).
- Net Profit Margin
- The net profit margin exhibited a general upward trend from May 2020 through January 2022, increasing from 6.17% to a peak of 8.85%. This improvement indicates enhanced profitability relative to revenue during this period. Following the peak, there was a decline in late 2022, with margins dropping to approximately 6.63% - 6.65%. However, from early 2023 onwards, the margin showed recovery and stabilization around 8.0% to 8.9%, reaching 8.94% in February 2024. Towards the end of the period analyzed, a mild gradual decrease is observable, settling near 8.05% by October 2025. Overall, the margin remains stronger compared to the starting point, reflecting improved cost management or pricing power in recent years.
- Asset Turnover
- Asset turnover ratio fluctuated over the periods with no sustained upward or downward trend. Initial values hovered around 1.62 to 1.68 in 2020, then increased steadily, reaching highs above 2.0 by early 2023, suggesting more efficient use of assets to generate sales. The peak measured approximately 2.22 in early 2023. After this point, the asset turnover declined steadily, falling to about 1.58 by late 2025. This decreasing trend in recent quarters may indicate either asset base growth outpacing sales or challenges in sales efficiency. The variability over time suggests the company’s asset utilization efficiency has been sensitive to operational or market conditions.
- Return on Assets (ROA)
- The ROA showed a robust increasing trend from May 2020 to early 2022, moving from 9.98% to a peak of 18.91% in January 2022. This substantial improvement suggests both profitability and asset utilization improved significantly during this time, likely driven by higher net margins and improved asset turnover. Following the peak, ROA declined noticeably to around 14.23%-14.73% in late 2022 and early 2023. Post-early 2023, it fluctuated yet remained elevated generally between 12.68% and 18.49%, with a downward bias in the latter periods. The decline towards the end of the dataset indicates some easing in efficient asset deployment or profitability, aligning with observed trends in asset turnover and net profit margin.