Applied Materials Inc (AMAT)
Profitability ratios
Return on sales
| Oct 31, 2024 | Oct 27, 2024 | Oct 31, 2023 | Oct 29, 2023 | Oct 31, 2022 | |
|---|---|---|---|---|---|
| Gross profit margin | 47.46% | 47.46% | 46.70% | 47.13% | 46.51% |
| Operating profit margin | 28.95% | 28.95% | 28.86% | 29.13% | 30.20% |
| Pretax margin | 30.00% | 30.00% | 29.10% | 29.37% | 29.47% |
| Net profit margin | 26.41% | 26.41% | 25.86% | 26.09% | 25.31% |
Applied Materials Inc has shown a steady improvement in its profitability ratios over the past few years. The gross profit margin, which indicates the percentage of revenue remaining after deducting the cost of goods sold, has increased from 46.51% in October 2022 to 47.46% in October 2024. This suggests that the company is effectively managing its production costs and generating higher profits on each dollar of sales.
The operating profit margin, a measure of operating efficiency, has remained relatively stable around 29% over the same period. This indicates that Applied Materials is efficiently controlling its operating expenses and generating consistent profits from its core business operations.
The pretax margin, representing the percentage of pre-tax income compared to total revenue, has shown a slight increase from 29.47% in October 2022 to 30% in October 2024. This improvement suggests that the company is effectively managing its tax liabilities and operating more efficiently to generate higher pre-tax profits.
Furthermore, the net profit margin, which reflects the proportion of revenue that translates into net income after all expenses have been deducted, has increased from 25.31% in October 2022 to 26.41% in October 2024. This demonstrates that Applied Materials is effectively controlling its costs and achieving higher profitability at the bottom line.
Overall, Applied Materials Inc's profitability ratios indicate a positive trend, with improvements in gross, operating, pretax, and net profit margins over the analyzed period. These positive trends reflect the company's effective cost management strategies and operational efficiency, translating into higher profitability for the organization.
Return on investment
| Oct 31, 2024 | Oct 27, 2024 | Oct 31, 2023 | Oct 29, 2023 | Oct 31, 2022 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 22.86% | 22.86% | 24.91% | 24.91% | 29.14% |
| Return on assets (ROA) | 20.86% | 20.86% | 22.31% | 22.31% | 24.41% |
| Return on total capital | 41.40% | 32.16% | 46.82% | 36.47% | 63.83% |
| Return on equity (ROE) | 37.77% | 37.77% | 41.94% | 41.94% | 53.51% |
Based on the provided data, we can analyze the profitability ratios of Applied Materials Inc over the specified periods:
1. Operating Return on Assets (Operating ROA):
- Applied Materials Inc's Operating ROA has shown a gradual decline from 29.14% as of October 31, 2022, to 22.86% as of October 31, 2024. This indicates a decreasing efficiency in generating operating income from its assets over time.
2. Return on Assets (ROA):
- The Return on Assets for Applied Materials Inc has also exhibited a downward trend, decreasing from 24.41% as of October 31, 2022, to 20.86% as of October 31, 2024. This indicates a decline in the company's overall profitability in relation to its total assets.
3. Return on Total Capital:
- The Return on Total Capital for Applied Materials Inc has been fluctuating, with a significant decrease from 63.83% on October 31, 2022, to 32.16% on October 27, 2024. This suggests a variation in the company's ability to generate returns from both equity and debt investment.
4. Return on Equity (ROE):
- The Return on Equity has followed a similar pattern to ROA and Operating ROA, showing a decrease from 53.51% on October 31, 2022, to 37.77% on October 31, 2024. This indicates a reduction in the profitability of the company's shareholders' equity over the specified period.
In summary, the profitability ratios of Applied Materials Inc have experienced a declining trend over the specified periods, indicating potential challenges in maximizing returns from its assets, capital, and equity. It is essential for the company to assess and address the factors contributing to this decline to improve its overall profitability and financial performance in the future.