Abiomed Inc. (NASDAQ:ABMD)

The financial metrics of the company over the six-year period from 2017 to 2022 indicate notable fluctuations in profitability and financial leverage.

Return on Assets (ROA)

The ROA exhibited a generally increasing trend from 9.47% in 2017 to a peak of 24.57% in 2019, reflecting improved efficiency in asset utilization during this period. However, post-2019, ROA declined substantially to 8.16% by 2022, indicating a decrease in asset profitability in recent years.

Financial Leverage

The financial leverage ratio remained relatively stable over the six years, decreasing slightly from 1.22 in 2017 to 1.11 in 2022. This suggests a modest reduction in the use of debt relative to equity, implying a cautious approach in financial structuring without significant leverage fluctuations.

Return on Equity (ROE)

ROE followed a pattern similar to ROA, rising from 11.53% in 2017 to a high of 27.65% in 2019, signifying strong returns generated on shareholder equity in the middle of the observed period. Subsequently, ROE declined sharply to 9.08% by 2022, indicative of reduced profitability impacting shareholders' returns more recently.

Overall, the data reflect a phase of improving profitability up to 2019, followed by a pronounced downturn following that year. The stable financial leverage throughout suggests that changes in ROA and ROE were predominantly driven by operational performance rather than by changes in financial structure or risk profile.

Net Profit Margin

The net profit margin demonstrated a fluctuating trend over the observed periods. Starting at 11.7% in 2017, it increased significantly to reach a peak of 33.66% in 2019. Subsequently, the margin decreased to 24.14% in 2020, slightly rose to 26.61% in 2021, and then declined sharply to 13.23% in 2022. Overall, the margin displayed volatility with a notable rise followed by a downward movement in the later years.

Asset Turnover

The asset turnover ratio showed a consistent downward trend from 0.81 in 2017 to 0.57 in 2021, indicating a reduction in revenue generated per unit of assets. There was a modest recovery in 2022 to 0.62, but the ratio remained below the initial levels observed in 2017. This suggests a declining efficiency in asset utilization over the period, with a slight improvement at the end.

Financial Leverage

Financial leverage remained relatively stable throughout the periods, with a minor decreasing trend. It started at 1.22 in 2017 and gradually declined to 1.11 by 2022. This stability indicates limited changes in the degree to which the company used debt relative to equity in its capital structure.

Return on Equity (ROE)

Return on equity exhibited variability similar to that of net profit margin. It increased from 11.53% in 2017 to a peak of 27.65% in 2019, followed by a decline to 19.05% in 2020 and further down to 9.08% by 2022. The decline in ROE in the later years appears aligned with the reductions in net profit margin and asset turnover, indicating overall diminished profitability and efficiency in generating returns on shareholders' equity.

Tax Burden

The tax burden ratio exhibits fluctuations over the analyzed periods, starting at 0.57 in 2017 and increasing to a peak of 0.98 in 2019. Following this peak, it decreases to 0.72 by 2022. This indicates variability in the effective tax rate relative to pre-tax earnings, suggesting changes in tax strategy or tax rates over time.

Interest Burden

Interest burden remains constant at 1 across all periods, indicating that interest expenses have not affected earnings before tax. This stability implies minimal or no borrowing costs impacting profitability.

EBIT Margin

The EBIT margin shows an overall positive trend from 20.59% in 2017, rising to a high of 34.23% in 2019. It then declines significantly to 18.47% by 2022. This pattern suggests improving operating efficiency until 2019 followed by a deterioration, potentially due to increased operating expenses or reduced pricing power.

Asset Turnover

Asset turnover decreases steadily from 0.81 in 2017 to 0.57 in 2021, before slightly recovering to 0.62 in 2022. This trend reflects a decreasing efficiency in generating sales from assets over time, which may indicate underutilization of assets or slower sales growth relative to asset base.

Financial Leverage

Financial leverage remains relatively stable, mildly decreasing from 1.22 in 2017 to 1.11 in 2022. This consistency indicates minimal changes in debt levels relative to equity, suggesting a conservative approach to financial gearing.

Return on Equity (ROE)

ROE shows notable variability, increasing from 11.53% in 2017 to a peak of 27.65% in 2019, then declining steadily to 9.08% by 2022. This decline in recent years indicates diminishing profitability from shareholders' equity, which aligns with decreases in both EBIT margin and asset turnover, despite stable financial leverage and interest burden.

Net Profit Margin

The net profit margin demonstrated a notable upward trend from 11.7% in 2017, reaching a peak of 33.66% in 2019. Following this peak, the margin declined to 24.14% in 2020 and experienced a slight recovery to 26.61% in 2021, before decreasing significantly to 13.23% in 2022. This indicates a period of strong profitability improvements until 2019, followed by a substantial contraction in profit margins in the subsequent years.

Asset Turnover

The asset turnover ratio showed a consistent downward trend over the six-year period, starting at 0.81 in 2017 and gradually declining to 0.62 in 2022. This decline suggests reduced efficiency in generating sales revenue from assets, with the most pronounced drop occurring between 2019 and 2021.

Return on Assets (ROA)

The return on assets followed a pattern somewhat similar to net profit margin, increasing from 9.47% in 2017 to a high of 24.57% in 2019. After this peak, ROA decreased to 16.69% in 2020 and continued declining to 8.16% by 2022. This trend reflects a diminishing ability to convert assets into net profit, with significant declines especially evident after 2019.

Tax Burden

The tax burden ratio has exhibited variability over the analyzed period, starting at 0.57 in 2017 and increasing to a peak of 0.98 in 2019. Following this peak, it declined gradually to 0.72 by 2022, indicating fluctuations in the proportion of earnings retained after taxes.

Interest Burden

The interest burden ratio remained constant at 1.00 throughout all reported years, signifying the company did not incur interest expenses affecting its earnings before interest and taxes during the period.

EBIT Margin

The EBIT margin showed a generally positive trend from 2017 to 2021, increasing from 20.59% to a high of 34.01%. However, in 2022, a sharp decline occurred, dropping the margin to 18.47%. This suggests a significant change in operating profitability in the most recent year after a period of improvement.

Asset Turnover

Asset turnover ratio steadily decreased from 0.81 in 2017 to a low of 0.57 in 2021, indicating declining efficiency in generating sales from assets. There was a slight recovery in 2022 to 0.62, suggesting a modest improvement in asset utilization.

Return on Assets (ROA)

ROA demonstrated strong growth initially, rising from 9.47% in 2017 to a peak of 24.57% in 2019. However, this was followed by a declining trend to 8.16% by 2022. The decrease in ROA in the latter years aligns with decreases in both EBIT margin and asset turnover, reflecting reduced overall profitability and asset efficiency.

Tax Burden

The tax burden ratio shows variability over the analyzed period. It increased significantly from 0.57 in 2017 to a peak of 0.98 in 2019, indicating a higher proportion of earnings retained after taxes in that year. Subsequently, it decreased to 0.72 by 2022, suggesting a relative increase in tax expenses or changes in tax strategy in the later years.

Interest Burden

The interest burden ratio remains consistent at 1 throughout the entire period from 2017 to 2022. This stability indicates that the company's earnings before interest and taxes (EBIT) are equal to its earnings before taxes (EBT), meaning interest expenses are negligible or non-existent during these years.

EBIT Margin

The EBIT margin demonstrates an overall upward trend from 20.59% in 2017 to its peak at 34.23% in 2019, reflecting improved operational efficiency or revenue growth relative to operating expenses. Following this peak, the margin slightly decreased but remained relatively high at 34.01% in 2021 before sharply declining to 18.47% in 2022. This decline in 2022 may suggest increased costs, reduced operational performance, or revenue pressures.

Net Profit Margin

The net profit margin shows substantial improvement from 11.7% in 2017 to a high of 33.66% in 2019, indicating strong profitability growth during that period. After 2019, it experienced a downward trend, falling to 13.23% in 2022. This reduction mirrors the decline seen in the EBIT margin and may reflect increased tax expenses, higher costs, or other profitability challenges in recent years.