Lam Research Corp. (NASDAQ:LRCX)

The quarterly financial data reveals notable trends in profitability and leverage ratios over the analyzed periods.

Return on Assets (ROA)

The ROA exhibited an overall upward trend from September 2020 to December 2021, increasing from 17.33% to a peak of 27.51%. Following this peak, a gradual decline occurred up to December 2023, reaching a low of 18.41%. However, starting from the first quarter of 2024, ROA resumed growth, recovering steadily to 26.53% by September 2025. This pattern suggests a period of improving asset efficiency followed by a temporary decline and subsequent recovery in asset profitability.

Financial Leverage

Financial leverage showed moderate fluctuations during the periods under review. Initially, leverage ratios remained relatively stable around 2.75 to 2.85 until mid-2021. Afterward, a declining trend emerged, reaching the lowest point of 2.15 by September 2025. The gradual reduction in leverage indicates a possible strategic de-risking or a shift toward more equity financing over time, reducing reliance on debt.

Return on Equity (ROE)

Return on equity demonstrated a strong upward trend from 48.15% in September 2020 to a significant peak of 75.35% in March 2022. Post this peak, there was a pronounced decline to 42.06% by December 2023. Beginning in early 2024, ROE showed a recovery trajectory, rising to 57.01% by September 2025. Despite fluctuations, the ROE remained notably high throughout the periods, indicating efficient equity utilization despite changes in asset returns and leverage.

In summary, the company experienced a phase of strengthening profitability and high returns on equity and assets in the early periods, followed by a mid-cycle dip. The subsequent phase shows signs of recovery in key profitability ratios coupled with a deliberate reduction in financial leverage, highlighting an evolving financial structure prioritizing balanced growth and risk management.

Net Profit Margin

The net profit margin exhibits an overall positive trend from September 2020 to June 2025. It started at 23.6% and gradually increased, peaking at 29.66% in June 2025. Notable fluctuations include a peak near 27.78% in December 2021, followed by a modest decline toward the end of 2023, reaching a low of 24.15%. After this dip, it recovered steadily through 2024 and into 2025, indicating effective management of costs and revenues over time.

Asset Turnover

The asset turnover ratio shows a general increase from 0.73 in September 2020 to a high point of 1.01 in March 2022. However, from mid-2022 onward, there is a discernible decline with fluctuations, dropping to 0.76 by December 2023. This is followed by a slight recovery through 2024 and 2025, finishing at 0.89 in June 2025. This pattern suggests changes in asset utilization efficiency, with some periods of reduced turnover efficiency potentially linked to asset growth or operational shifts.

Financial Leverage

Financial leverage experienced a gradual decline from 2.78 in September 2020 to 2.15 in June 2025. The highest leverage was observed in March 2021 at 2.85, followed by a steady reduction. This trend indicates a gradual decrease in the extent to which debt financing is used, reflecting possible deleveraging strategies or improved equity financing.

Return on Equity (ROE)

ROE displayed strong growth early on, rising from 48.15% in September 2020 to a peak of 75.35% in March 2022. Subsequently, there was a consistent downward trend reaching a low near 42.06% in December 2023. From this point, ROE rebounded gradually through 2024 and 2025, reaching 57.01% by June 2025. The movement in ROE correlates with fluctuations in net profit margin, asset turnover, and financial leverage, reflecting changes in profitability, efficiency, and capital structure over the periods analyzed.

Net Profit Margin

The net profit margin exhibits a generally positive upward trend over the observed periods. Beginning at 23.6% in late September 2020, it increased steadily to peak at 27.78% in December 2021. Following this peak, there was a slight decline reaching a low of 24.15% by December 2023. However, thereafter, the margin rebounded and maintained an increasing trajectory, ultimately reaching a high of 29.66% by September 2025. This pattern suggests initial growth in profitability, a mild correction, and subsequent robust recovery and improvement in profit margins over the longer term.

Asset Turnover

Asset turnover demonstrated considerable variation during the periods analyzed. Starting at a ratio of 0.73 in late September 2020, it showed consistent growth to a peak of 1.01 observed twice between September 2021 and March 2022. After this high, there was a gradual decline to 0.76 in December 2023, indicating reduced efficiency in asset utilization at that point. Post-December 2023, the ratio stabilized and moderately improved, ending near 0.89 by September 2025. This suggests a cycle of increased operational efficiency followed by a decreased turnover, and then a recovery phase.

Return on Assets (ROA)

Return on assets saw a strong growth trajectory at the outset, rising from 17.33% in late September 2020 to a peak of 27.51% in December 2021. Subsequently, ROA experienced a downward trend, reaching its lowest at 18.41% in December 2023. Following this trough, the metric demonstrated a steady recovery and upward momentum, increasing to 26.53% by September 2025. This trend correlates with net profit margin and asset turnover movements, reflecting cyclical variations in asset profitability and operational effectiveness, with an overall positive long-term outlook.