Stock Analysis on Net
Stock Analysis on Net

Lam Research Corp. (NASDAQ:LRCX)

DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin

Microsoft Excel

Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.

Two-Component Disaggregation of ROE

Lam Research Corp., decomposition of ROE

Microsoft Excel
ROE = ROA × Financial Leverage
Jun 30, 2024 44.82% = 20.42% × 2.20
Jun 25, 2023 54.94% = 24.02% × 2.29
Jun 26, 2022 73.35% = 26.78% × 2.74
Jun 27, 2021 64.85% = 24.59% × 2.64
Jun 28, 2020 43.53% = 15.47% × 2.81
Jun 30, 2019 46.89% = 18.26% × 2.57

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).

The primary reason for the decrease in return on equity ratio (ROE) over 2024 year is the decrease in profitability measured by return on assets ratio (ROA).

Three-Component Disaggregation of ROE

Lam Research Corp., decomposition of ROE

Microsoft Excel
ROE = Net Profit Margin × Asset Turnover × Financial Leverage
Jun 30, 2024 44.82% = 25.68% × 0.80 × 2.20
Jun 25, 2023 54.94% = 25.88% × 0.93 × 2.29
Jun 26, 2022 73.35% = 26.73% × 1.00 × 2.74
Jun 27, 2021 64.85% = 26.72% × 0.92 × 2.64
Jun 28, 2020 43.53% = 22.42% × 0.69 × 2.81
Jun 30, 2019 46.89% = 22.70% × 0.80 × 2.57

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).

The primary reason for the decrease in return on equity ratio (ROE) over 2024 year is the decrease in efficiency measured by asset turnover ratio.

Five-Component Disaggregation of ROE

Lam Research Corp., decomposition of ROE

Microsoft Excel
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Financial Leverage
Jun 30, 2024 44.82% = 0.88 × 0.96 × 30.50% × 0.80 × 2.20
Jun 25, 2023 54.94% = 0.88 × 0.96 × 30.39% × 0.93 × 2.29
Jun 26, 2022 73.35% = 0.89 × 0.97 × 31.22% × 1.00 × 2.74
Jun 27, 2021 64.85% = 0.89 × 0.95 × 31.31% × 0.92 × 2.64
Jun 28, 2020 43.53% = 0.87 × 0.94 × 27.40% × 0.69 × 2.81
Jun 30, 2019 46.89% = 0.90 × 0.95 × 26.56% × 0.80 × 2.57

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).

The primary reason for the decrease in return on equity ratio (ROE) over 2024 year is the decrease in efficiency measured by asset turnover ratio.

Two-Component Disaggregation of ROA

Lam Research Corp., decomposition of ROA

Microsoft Excel
ROA = Net Profit Margin × Asset Turnover
Jun 30, 2024 20.42% = 25.68% × 0.80
Jun 25, 2023 24.02% = 25.88% × 0.93
Jun 26, 2022 26.78% = 26.73% × 1.00
Jun 27, 2021 24.59% = 26.72% × 0.92
Jun 28, 2020 15.47% = 22.42% × 0.69
Jun 30, 2019 18.26% = 22.70% × 0.80

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).

The primary reason for the decrease in return on assets ratio (ROA) over 2024 year is the decrease in asset turnover ratio.

Four-Component Disaggregation of ROA

Lam Research Corp., decomposition of ROA

Microsoft Excel
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Jun 30, 2024 20.42% = 0.88 × 0.96 × 30.50% × 0.80
Jun 25, 2023 24.02% = 0.88 × 0.96 × 30.39% × 0.93
Jun 26, 2022 26.78% = 0.89 × 0.97 × 31.22% × 1.00
Jun 27, 2021 24.59% = 0.89 × 0.95 × 31.31% × 0.92
Jun 28, 2020 15.47% = 0.87 × 0.94 × 27.40% × 0.69
Jun 30, 2019 18.26% = 0.90 × 0.95 × 26.56% × 0.80

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).

The primary reason for the decrease in return on assets ratio (ROA) over 2024 year is the decrease in efficiency measured by asset turnover ratio.

Disaggregation of Net Profit Margin

Lam Research Corp., decomposition of net profit margin ratio

Microsoft Excel
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Jun 30, 2024 25.68% = 0.88 × 0.96 × 30.50%
Jun 25, 2023 25.88% = 0.88 × 0.96 × 30.39%
Jun 26, 2022 26.73% = 0.89 × 0.97 × 31.22%
Jun 27, 2021 26.72% = 0.89 × 0.95 × 31.31%
Jun 28, 2020 22.42% = 0.87 × 0.94 × 27.40%
Jun 30, 2019 22.70% = 0.90 × 0.95 × 26.56%

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).

The primary reason for the decrease in net profit margin ratio over 2024 year is the decrease in effect of interest expense measured by interest burden ratio.