Walt Disney Co. (NYSE:DIS)

The financial performance, as indicated by Return on Assets (ROA) and Financial Leverage, demonstrates a notable evolution over the observed period. Initially, the period from January 2021 to October 2021 reflects negative or low profitability, followed by a period of improvement and then fluctuations. Return on Equity (ROE) mirrors these trends, exhibiting a strong correlation with changes in ROA and Financial Leverage.

Return on Assets (ROA)

ROA begins at -2.45% in January 2021 and remains negative through April 2021, reaching -2.25%. A positive trend emerges in July 2021, reaching 0.56%, and continues to increase to 0.98% in October 2021. The ROA generally increased through December 2022, peaking at 1.64%. A subsequent decline is observed in early 2023, reaching 1.11% in July 2023, before recovering and accelerating significantly in the latter half of the period. The ROA reaches 6.28% in September 2025, representing the highest value in the observed timeframe.

Financial Leverage

Financial Leverage exhibits a relatively stable pattern with a gradual downward trend. Starting at 2.40 in January 2021, it decreases steadily to 2.10 by December 2022. The decline continues, reaching a low of 1.80 in June 2025, before a slight increase to 1.86 in September 2025 and 1.86 in December 2025. The overall trend suggests a decreasing reliance on financial leverage over the period.

Return on Equity (ROE)

ROE initially reflects the negative ROA values, starting at -5.89% in January 2021 and remaining negative through October 2021 (-5.28% and -2.25% respectively). ROE improves alongside ROA, reaching 3.43% by January 2022. Fluctuations are observed throughout 2022 and early 2023, with a low of 2.31% in July 2023. A significant upward trend begins in late 2023, accelerating through 2024 and 2025. ROE culminates at 11.29% in September and December 2025, demonstrating substantial improvement over the initial values. The correlation between ROE and ROA is strong, with changes in ROE largely driven by changes in ROA, given the relatively stable Financial Leverage.

The observed trends suggest a period of initial underperformance followed by a sustained improvement in profitability and shareholder returns. The decreasing Financial Leverage indicates a shift towards a more conservative capital structure, while the increasing ROA and ROE demonstrate enhanced efficiency in utilizing assets and equity to generate profits. The most significant gains are concentrated in the later periods of the observation window.

The three-component DuPont analysis reveals a dynamic shift in the company’s Return on Equity (ROE) over the observed period. Initially, ROE was negative, driven by a substantial loss margin. However, a clear upward trajectory in ROE is evident, culminating in a significant increase by the end of the period. This improvement is attributable to changes in Net Profit Margin, Asset Turnover, and Financial Leverage, which are analyzed in detail below.

Net Profit Margin

The Net Profit Margin experienced considerable volatility. Beginning with negative values in early 2021, it steadily improved, becoming positive in July 2021 and continuing to rise. A notable acceleration in margin expansion occurred from December 2024 onwards, reaching a peak of 13.14% in September 2025 before a slight decrease to 12.80% by the end of the period. This suggests increasing profitability and effective cost management in recent quarters.

Asset Turnover

Asset Turnover demonstrated a consistent, albeit gradual, increase throughout the period. Starting at 0.30 in January 2021, it rose to 0.47 by June 2024 and remained relatively stable around 0.48 for the subsequent observations. This indicates improving efficiency in utilizing assets to generate revenue. The rate of increase slowed in the later part of the period, suggesting potential limitations to further improvements in asset utilization.

Financial Leverage

Financial Leverage exhibited a declining trend over the analyzed timeframe. Beginning at 2.40 in January 2021, it decreased to 1.86 by December 2025, with a slight increase to 1.86 in the final observation. This suggests a reduction in the company’s reliance on debt financing. While lower leverage reduces financial risk, it also diminishes the potential for amplifying returns during profitable periods.

The combined effect of these three components drove the overall improvement in ROE. The initial negative ROE was primarily due to the negative Net Profit Margin. As the margin turned positive and increased, coupled with improvements in Asset Turnover, ROE began to rise. The decreasing Financial Leverage moderated the potential ROE increase, but the positive impact of margin and turnover improvements ultimately resulted in a substantial increase in ROE over the period. The most significant gains in ROE occurred in the latter part of the observation window, coinciding with the accelerated growth in Net Profit Margin.

The observed trends suggest a strengthening financial performance, characterized by improved profitability and asset utilization. The reduction in financial leverage indicates a more conservative capital structure. Continued monitoring of these ratios will be crucial to assess the sustainability of these improvements and their impact on long-term shareholder value.

The financial performance, as indicated by the two-component disaggregation of Return on Assets (ROA), demonstrates a significant recovery and improvement over the observed period. Initially, the metrics reflect challenging conditions, followed by a consistent upward trajectory. The analysis focuses on Net Profit Margin and Asset Turnover, and their combined effect on ROA.

Net Profit Margin

The Net Profit Margin began with negative values in early 2021, reaching -8.15% in January 2021 and -7.73% in April 2021. A positive trend emerges in July 2021, with the margin reaching 1.77%, and continues to improve through October 2021 (2.96%) and into 2022, peaking at 4.22% in January 2022. While experiencing some fluctuation throughout 2022, the margin generally remained positive. A substantial increase is observed in late 2024 and early 2025, culminating in 13.14% in September 2025 and 12.80% in December 2025. This indicates a strengthening ability to translate sales into profit.

Asset Turnover

Asset Turnover shows a consistent, albeit gradual, increase throughout the period. Starting at 0.30 in January 2021, it steadily rises to 0.42 by December 2022. This upward trend continues, reaching 0.48 in March 2025 and remaining relatively stable at 0.47 and 0.48 in subsequent quarters. This suggests increasing efficiency in utilizing assets to generate revenue.

Return on Assets (ROA)

Reflecting the improvements in both Net Profit Margin and Asset Turnover, ROA exhibits a marked positive trend. Beginning with negative values (-2.45% and -2.25% in January and April 2021 respectively), ROA turns positive in July 2021 (0.56%) and continues to grow. The ROA reaches 2.01% in April 2023 and demonstrates accelerating growth in late 2024 and 2025, peaking at 6.28% in September 2025 before slightly decreasing to 6.06% in December 2025. The correlation between the increasing Net Profit Margin and Asset Turnover is clearly visible in the ROA’s positive trajectory.

In summary, the observed period demonstrates a significant turnaround in financial performance. The initial challenges, reflected in negative ROA values, were overcome through improvements in both profitability (Net Profit Margin) and asset utilization efficiency (Asset Turnover). The latter part of the period is characterized by robust growth in all three metrics, indicating a strengthening financial position.