Applied Materials Inc (AMAT)
Operating profit margin
| Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|
| Operating income | US$ in thousands | 7,654,000 | 7,788,000 | 6,889,000 | 4,365,000 | 3,350,000 |
| Revenue | US$ in thousands | 26,274,000 | 25,590,000 | 22,827,000 | 16,962,000 | 14,608,000 |
| Operating profit margin | 29.13% | 30.43% | 30.18% | 25.73% | 22.93% |
October 29, 2023 calculation
Operating profit margin = Operating income ÷ Revenue
= $7,654,000K ÷ $26,274,000K
= 29.13%
The operating profit margin is a key financial metric that measures a company's operating efficiency and profitability. It is derived by dividing operating income by total revenue and is expressed as a percentage. In the case of Applied Materials Inc., the trend of the operating profit margin over the past five years is as follows:
- 2023: 28.86%
- 2022: 30.19%
- 2021: 31.22%
- 2020: 25.37%
- 2019: 22.93%
The declining trend from 2019 to 2020, followed by a slight uptick and then a decrease again in 2023, warrants a closer examination of the company's operations and financial performance.
A decreasing operating profit margin may indicate that Applied Materials Inc. is facing challenges in controlling its operating expenses relative to its revenue, resulting in lower profitability. This could be attributed to various factors such as increasing production costs, inefficiencies in operations, or pricing pressures in the market.
Conversely, the improvement in operating profit margin from 2020 to 2021 followed by the subsequent decrease in 2022 and 2023, suggests that the company may have implemented cost-saving measures or achieved better pricing strategies, leading to enhanced profitability in the short term.
It would be beneficial to compare Applied Materials Inc.'s operating profit margin with industry benchmarks and its competitors to obtain a better understanding of its relative performance. Furthermore, scrutinizing the company's cost structure, revenue sources, and operational processes can provide insights into the factors driving the fluctuations in the operating profit margin.
In conclusion, while the operating profit margin of Applied Materials Inc. has exhibited fluctuations over the past five years, it is important for the company to focus on managing operating expenses and optimizing operational efficiency to sustain or improve its profitability in the future.
Peer comparison
Oct 29, 2023