DuPont Components and Stock Returns: An Empirical Study from U.S Financial Sector

Abstract

The thesis examines how the three components – net profit margin, total asset turnover, and equity multiplier – have an impact on stock returns in the U.S. financial sector. Using quarterly data from 14 financial firms between 2015 and 2024, I applied panel data regression with fixed and random effects models, supported by the Hausman test and diagnostic tests. The results show that profitability and leverage significantly impact stock returns, while asset turnover shows no impact. The model's limited explanatory power indicates that macroeconomic factors significantly influence stock price movements. Overall, the study concludes that DuPont's components provide useful insights, but they can not fully explain stock returns in highly regulated industries.