Starbucks Corp. (NASDAQ:SBUX)

The Return on Assets (ROA) demonstrates a significant upward trend from December 2020 through June 2021, increasing from 2.22% to 9.59%. This positive momentum continues into the following quarters, peaking at 15.24% in January 2022. Subsequently, ROA experiences a gradual decline, reaching 4.25% by December 2025. Despite this decline, ROA generally remains positive throughout the observed period.

Return on Assets (ROA)

Initially, ROA exhibits substantial growth, potentially indicating improved asset utilization and profitability. The subsequent decline may suggest increased asset base without a proportional increase in earnings, or decreasing profitability. The fluctuations observed could be influenced by seasonal factors or strategic business decisions.

The Return on Equity (ROE) is not populated with values, preventing a comprehensive DuPont analysis. Without ROE figures, it is impossible to assess the impact of financial leverage on overall returns. The absence of financial leverage data further limits the ability to dissect the drivers of ROE.

Financial Leverage

The complete absence of financial leverage values hinders the assessment of the company’s capital structure and its impact on shareholder returns. A complete DuPont analysis requires this component to understand how effectively the company uses debt to amplify returns.

Two-Component ROE Disaggregation

Due to the lack of ROE and financial leverage values, a two-component disaggregation of ROE cannot be performed. The relationship between profitability (ROA) and financial leverage in generating shareholder returns remains unknown based on the information presented.

In conclusion, while the ROA trend provides some insight into asset performance, a complete understanding of the company’s profitability and financial strategy requires the inclusion of ROE and financial leverage metrics. The current information is insufficient for a full DuPont analysis.

The information presents a quarterly view of Net Profit Margin, Asset Turnover, and Return on Equity (ROE) components. A clear trend emerges in Net Profit Margin, demonstrating substantial improvement from late 2020 through late 2023, followed by a decline into the forecast period of 2025. Asset Turnover exhibits a consistent upward trajectory, albeit at a decelerating rate, throughout the observed period. ROE figures are absent, preventing a complete DuPont analysis, but the available components allow for partial interpretation.

Net Profit Margin

The Net Profit Margin experienced a significant increase from 2.87% in December 2020 to a peak of 14.47% in January 2022. This suggests improved profitability during that period. The margin remained relatively high, fluctuating between 10.09% and 11.70% from October 2022 to December 2023. However, a noticeable downward trend is observed from January 2024 onwards, with the margin decreasing to 3.63% by March 2025. This decline warrants further investigation to determine the underlying causes, such as increased costs or pricing pressures.

Asset Turnover

Asset Turnover steadily increased from 0.77 in December 2020 to 1.26 in December 2023, indicating increasing efficiency in utilizing assets to generate sales. The rate of increase slowed in 2024, with the ratio reaching 1.21 in June 2024, before decreasing to 1.13 in October 2024. A slight recovery to 1.17 is observed in September 2025, but the overall growth appears to be moderating. This suggests that while asset utilization remains strong, opportunities for further improvement may be diminishing.

Financial Leverage

Data for Financial Leverage is not provided. Without this component, a complete calculation and analysis of ROE using the DuPont formula is impossible. The absence of this information limits the ability to fully assess the company’s financial performance and risk profile.

Return on Equity (ROE)

ROE values are not present. Consequently, a direct assessment of the company’s profitability relative to shareholder equity cannot be made. The lack of ROE figures hinders a comprehensive understanding of the overall financial performance and the effectiveness of the company’s strategies.

In summary, the available information suggests a period of strong profitability and improving asset utilization. However, the recent decline in Net Profit Margin and the absence of ROE and Financial Leverage figures raise concerns and necessitate further investigation. The moderating growth in Asset Turnover also indicates potential limitations to future efficiency gains.

The five-component DuPont analysis reveals notable shifts in profitability and efficiency over the observed period. A consistent increase in the EBIT margin is evident, particularly from December 2020 to October 2023, followed by a decline towards the end of the period. Simultaneously, asset turnover demonstrates a general upward trend, though with some fluctuation, indicating improving efficiency in utilizing assets to generate sales. The tax burden exhibits a gradual decrease, while the interest burden remains relatively stable, with a slight downward trend in the most recent quarters. The absence of financial leverage values limits a complete ROE decomposition.

EBIT Margin

The EBIT margin experienced substantial growth, increasing from 5.60% in December 2020 to a peak of 20.05% in October 2021. While remaining high through July 2022 (18.31%), it subsequently decreased to 7.44% by March 2025. This suggests a period of significant profitability improvement followed by a more recent erosion of earnings power. The initial surge could be attributed to factors such as pricing strategies, cost management, or shifts in product mix, while the later decline may indicate increased competition, rising input costs, or changing consumer demand.

Asset Turnover

Asset turnover consistently improved from 0.77 in December 2020 to 1.26 in December 2023, indicating increasing efficiency in generating sales from its asset base. However, the rate of improvement slowed and then reversed slightly, falling to 1.17 in March 2025. This suggests that while the company initially became more effective at utilizing its assets, this trend has plateaued and potentially begun to diminish. This could be due to increased investment in assets without a corresponding increase in sales, or a slowdown in sales growth.

Tax Burden

The tax burden generally decreased over the period, moving from 0.80 in December 2020 to 0.61 in December 2025. This reduction in the effective tax rate would have positively impacted net income and, consequently, ROE. The decrease could be due to changes in tax laws, shifts in the geographic distribution of earnings, or the utilization of tax credits or deductions.

Interest Burden

The interest burden remained relatively stable, fluctuating between 0.64 and 0.92 throughout the observed period. A slight downward trend is visible in the most recent quarters, decreasing from 0.90 in April 2022 to 0.80 in March 2025. This indicates a consistent level of interest expense relative to earnings before interest and taxes, with a minor improvement towards the end of the period. The stability suggests consistent debt levels or effective interest rate management.

The absence of financial leverage values prevents a complete assessment of the drivers of ROE. However, the observed trends in the other components suggest that the initial increase in ROE was likely driven by improvements in profitability (EBIT margin) and efficiency (asset turnover), partially offset by the interest burden. The recent decline in EBIT margin, coupled with the plateauing asset turnover, suggests that ROE may have peaked and could be facing downward pressure. Further analysis incorporating financial leverage is necessary for a comprehensive understanding of ROE performance.

The financial performance, as indicated by the two-component disaggregation of Return on Assets (ROA), demonstrates significant fluctuations over the observed period. A clear trend of increasing profitability and efficiency is initially apparent, followed by a period of stabilization and eventual decline. The analysis focuses on Net Profit Margin and Asset Turnover to understand the drivers of these changes in ROA.

Net Profit Margin

The Net Profit Margin exhibits a substantial increase from 2.87% in December 2020 to a peak of 14.47% in January 2022. This suggests improved cost control or increased pricing power during this timeframe. Following this peak, the margin generally decreased, although it remained above 10% for several quarters. A more pronounced downward trend is observed from October 2022, culminating in 3.63% in December 2025. This decline indicates increasing costs or reduced pricing flexibility in more recent periods.

Asset Turnover

Asset Turnover shows a consistent upward trend from 0.77 in December 2020 to 1.26 in December 2023, indicating increasing efficiency in utilizing assets to generate sales. This suggests improved operational efficiency or better inventory management. However, from December 2023 onward, Asset Turnover begins to decline, reaching 1.17 in September 2025 and then 1.16 in December 2025. This suggests a potential slowdown in sales generation relative to the asset base.

The Return on Assets (ROA) initially reflects the positive impact of both increasing Net Profit Margin and Asset Turnover, rising from 2.22% to a high of 15.24% in January 2022. The subsequent decline in ROA, from 15.24% to 4.25% in December 2025, is attributable to the combined effect of decreasing Net Profit Margin and a leveling off, then slight decline, in Asset Turnover. The period between July 2022 and December 2025 demonstrates a clear weakening of ROA, driven primarily by the erosion of profitability, with a contributing factor from the reduced efficiency in asset utilization towards the end of the period.

ROA Decomposition

The initial increase in ROA was largely driven by the significant improvement in Net Profit Margin. As the margin began to decline, the continued high Asset Turnover partially offset this effect, maintaining ROA at a relatively elevated level for a period. However, the eventual decline in both components resulted in a substantial decrease in ROA. The recent performance suggests that maintaining profitability is crucial for sustaining ROA, and that improvements in asset utilization alone may not be sufficient to counteract declining margins.

In summary, the observed trends indicate a shift from a period of strong performance driven by both profitability and efficiency to a period of declining performance influenced by decreasing profitability and a stabilization, then slight reduction, in asset utilization.

The financial performance, as indicated by the four-component DuPont analysis, reveals a dynamic period with notable shifts in profitability and efficiency. Overall, Return on Assets (ROA) experienced a substantial increase from December 2020 to October 2021, followed by a gradual decline through December 2025. This fluctuation is attributable to changes in the constituent components of the ROA calculation.

EBIT Margin

The EBIT Margin demonstrated a significant upward trajectory from 5.60% in December 2020 to a peak of 20.05% in October 2021. Subsequently, the margin experienced a decline, albeit remaining positive throughout the observed period, ending at 7.44% in December 2025. This suggests a period of rapidly improving operational profitability followed by increasing cost pressures or competitive forces. The most recent quarters show a pronounced decrease in EBIT margin.

Asset Turnover

Asset Turnover consistently increased from 0.77 in December 2020 to 1.26 in December 2023, indicating improved efficiency in utilizing assets to generate sales. However, a slight decrease in asset turnover is observed in the later periods, falling to 1.17 in December 2025. This suggests a potential slowdown in the rate at which assets are being converted into revenue.

Tax Burden

The Tax Burden generally decreased over the analyzed period, starting at 0.80 in December 2020 and declining to 0.61 in December 2025. This indicates a lower proportion of pre-tax profits being allocated to taxes, potentially due to changes in tax regulations or effective tax rate management. A more substantial drop is observed in the final two quarters, from 0.76 to 0.61.

Interest Burden

The Interest Burden exhibited an initial increase from 0.64 in December 2020 to 0.92 in January 2022, suggesting a higher proportion of earnings being used to cover interest expenses. It then stabilized around 0.90 for several quarters before gradually decreasing to 0.80 in December 2025. This indicates a potential reduction in debt levels or lower interest rates, improving the company’s ability to service its debt.

The initial rise in ROA was primarily driven by the substantial improvement in the EBIT Margin, coupled with increasing Asset Turnover. The subsequent decline in ROA, despite a relatively stable Interest and Tax Burden, can be attributed to the decreasing EBIT Margin and a slight reduction in Asset Turnover in the most recent periods. The interplay between these factors highlights the importance of maintaining profitability and efficient asset utilization to sustain strong financial performance.

The information reveals fluctuations in profitability components over the analyzed period. A consistent pattern of interplay between tax burden, interest burden, and EBIT margin influences the overall net profit margin. Generally, the period demonstrates a decline in profitability metrics towards the end of the observed timeframe.

Tax Burden

The tax burden exhibits relative stability in the initial period, fluctuating between 0.75 and 0.80. A gradual decline is then observed, accelerating towards the end of the period, reaching 0.61 and 0.74 in the final quarters. This decreasing tax burden, while potentially beneficial, does not fully offset declines in other profitability measures.

Interest Burden

The interest burden generally increases from 0.64 to a peak of 0.92, remaining at that level for several quarters. A slight decrease is then noted, falling to 0.80 by the end of the period. The consistently high interest burden suggests a significant level of debt financing, impacting overall profitability. The recent decline may indicate debt reduction or refinancing efforts.

EBIT Margin

The EBIT margin demonstrates a substantial increase from 5.60 to a high of 20.05, indicating improved operational efficiency and profitability. However, a subsequent and consistent decline is observed, falling to 7.44 by the end of the period. This decline suggests increasing operational costs, decreased pricing power, or a combination of both. The magnitude of this decrease is significant and warrants further investigation.

Net Profit Margin

The net profit margin mirrors the trend of the EBIT margin, increasing from 2.87 to 14.47, then declining to 3.63. The initial increase is likely driven by improvements in operational performance reflected in the EBIT margin. The subsequent decline is attributable to the combined effects of the decreasing EBIT margin, the relatively stable interest burden, and the decreasing tax burden. The most substantial decrease in net profit margin occurs in the final quarters, indicating a worsening profitability position.

The disaggregation of the net profit margin reveals that the decline in overall profitability is primarily driven by the decreasing EBIT margin. While the tax burden provides some offset, it is insufficient to counteract the impact of the declining EBIT margin and the consistently high interest burden. The trend suggests increasing challenges in maintaining profitability, potentially stemming from rising costs or competitive pressures.