Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Common-Size Balance Sheet: Assets
- Analysis of Short-term (Operating) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Price to Sales (P/S) since 2005
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Profitability Ratios (Summary)
Celgene Corp., profitability ratios
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Gross Profit Margin
- The gross profit margin remained consistently high over the period, showing a steady upward trend from 94.9% in 2014 to a peak of 96.45% in 2017, followed by a slight decrease to 96.15% in 2018. This indicates a strong ability to maintain high profitability at the gross level with minimal fluctuation.
- Operating Profit Margin
- The operating profit margin exhibited notable variability during the period. It decreased from 33.3% in 2014 to 24.61% in 2015, then gradually improved, reaching a peak of 36.28% in 2017, before slightly declining to 34.01% in 2018. The initial drop followed by a recovery suggests changes in operational efficiency or cost management across these years.
- Net Profit Margin
- The net profit margin showed a declining trend from 26.44% in 2014 to 17.49% in 2015 and remained relatively stable in 2016 at 17.87%. It then increased steadily to 22.66% in 2017 and further to 26.51% in 2018, nearly returning to the initial 2014 level. This pattern indicates initial challenges affecting net profitability, followed by gradual improvement and recovery.
- Return on Equity (ROE)
- Return on equity demonstrated a general upward trajectory with some fluctuations. Starting at 30.65% in 2014, it dipped slightly to 27.07% in 2015, rebounded to 30.29% in 2016, surged to 42.48% in 2017, and culminated in a significant increase to 65.67% in 2018. The marked rise in the last two years reflects enhanced effectiveness in generating returns from shareholders' equity.
- Return on Assets (ROA)
- Return on assets decreased markedly from 11.53% in 2014 to 5.92% in 2015, followed by a gradual improvement to 7.12% in 2016, 9.75% in 2017, and 11.4% in 2018. The decline and subsequent recovery indicate initial inefficiencies in asset utilization, which were progressively resolved over the years.
Return on Sales
Return on Investment
Gross Profit Margin
Celgene Corp., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Net product sales | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Gross profit margin = 100 × Gross profit ÷ Net product sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Gross Profit
- Over the five-year period, gross profit demonstrated a consistent upward trend. Starting from 7,178 million US dollars at the end of 2014, it increased steadily each year, reaching 14,678 million US dollars by the end of 2018. This represents more than a doubling of gross profit within the timeframe, indicating successful expansion and possibly improved operational efficiency.
- Net Product Sales
- Net product sales also showed a continuous increase year over year. Beginning at 7,564 million US dollars in 2014, net product sales rose to 15,265 million US dollars by the end of 2018. This significant growth aligns closely with the increase in gross profit, suggesting that sales growth was a primary driver of increased profitability.
- Gross Profit Margin
- The gross profit margin percentage remained relatively stable and high throughout the period, consistently around or above 94%. It started at 94.9% in 2014 and peaked at 96.45% in 2017, before a slight decline to 96.15% in 2018. The stability and high levels of the margin indicate effective cost control in relation to sales, maintaining strong profitability at the gross level.
Operating Profit Margin
Celgene Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | ||||||
| Net product sales | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Operating profit margin = 100 × Operating income ÷ Net product sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Income
- The operating income experienced an overall upward trend across the analyzed periods. Starting from US$ 2,519 million in 2014, there was a slight decline to US$ 2,255 million in 2015. However, subsequent years showed consistent growth, reaching US$ 3,167 million in 2016, US$ 4,707 million in 2017, and US$ 5,191 million in 2018. This indicates an improvement in operating efficiency and profitability after the initial dip in 2015.
- Net Product Sales
- Net product sales displayed a steady and significant increase throughout the five-year span. Sales rose from US$ 7,564 million in 2014 to US$ 9,161 million in 2015, and continued to grow each year, reaching US$ 11,185 million in 2016, US$ 12,973 million in 2017, and finally US$ 15,265 million in 2018. This consistent growth suggests expanding market presence or increased demand for products offered.
- Operating Profit Margin
- The operating profit margin showed variability over the period. It declined from 33.3% in 2014 to 24.61% in 2015, indicating reduced profitability relative to sales that year. It then recovered to 28.31% in 2016 and peaked at 36.28% in 2017. In 2018, the margin slightly decreased to 34.01%, maintaining a relatively high level. These fluctuations suggest changes in cost management or pricing strategies impacting profitability margins.
Net Profit Margin
Celgene Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Net product sales | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Net profit margin = 100 × Net income ÷ Net product sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- Net income experienced fluctuations over the reported periods. It declined from 2000 million USD in 2014 to 1602 million USD in 2015, representing a significant decrease. Subsequently, net income recovered to 1999 million USD in 2016, followed by substantial growth in the next two years, reaching 2940 million USD in 2017 and 4046 million USD in 2018. This indicates a strong upward trend in profitability after the initial dip.
- Net Product Sales
- Net product sales demonstrated consistent growth throughout the years. Sales increased steadily from 7564 million USD in 2014 to 9161 million USD in 2015, and continued to rise each year, reaching 11185 million USD in 2016, 12973 million USD in 2017, and 15265 million USD in 2018. This shows a robust expansion in revenue from core products over the five-year period.
- Net Profit Margin
- The net profit margin showed variability but an overall positive trajectory. Initially, it declined from 26.44% in 2014 to 17.49% in 2015, marking a notable reduction in profitability relative to sales. The margin stabilized slightly at 17.87% in 2016 and then improved significantly in the subsequent years, reaching 22.66% in 2017 and returning to a high level of 26.51% in 2018, effectively surpassing the margin recorded in 2014. This pattern indicates improved efficiency or profitability management in later years.
- Summary of Trends
- The financial data reveal that despite a dip in 2015, both net income and net profit margin recovered strongly and reached new highs by 2018. Net product sales showed uninterrupted growth, suggesting successful market expansion or product acceptance. The recovery in profitability metrics alongside increasing sales suggests effective cost control, operational efficiency, or favorable pricing strategies contributing to enhanced financial performance in the latter years of the dataset.
Return on Equity (ROE)
Celgene Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- The net income of the company fluctuated over the five-year period, starting at 2000 million USD in 2014 and decreasing to 1602 million USD in 2015. It then recovered to nearly 2000 million USD in 2016, followed by a significant increase in 2017 to 2940 million USD. The upward trend continued into 2018, with net income reaching 4046 million USD, representing the highest value in the given timeline.
- Stockholders' Equity
- Stockholders' equity showed variability throughout the years. It decreased from 6525 million USD in 2014 to 5919 million USD in 2015, then increased to 6599 million USD in 2016. From 2016, there was a slight rise to 6921 million USD in 2017, before declining again to 6161 million USD in 2018. Overall, the figure remained within a relatively narrow range, with no substantial growth or decline over the period.
- Return on Equity (ROE)
- ROE exhibited a declining trend initially, moving from 30.65% in 2014 down to 27.07% in 2015. This was followed by a recovery to approximately 30.29% in 2016. Notably, 2017 saw a pronounced increase to 42.48%, which accelerated considerably in 2018, reaching 65.67%. This indicates an improving efficiency in generating profit from shareholders' equity, particularly strong in the final two years.
- Overall Analysis
- The company's net income demonstrates strong growth from 2016 onwards, particularly in 2017 and 2018. This increase in profitability is not mirrored by a corresponding rise in stockholders' equity, which remained somewhat stable with minor fluctuations. The upward trend in ROE during the last two years, especially its sharp increase, implies that the company has been increasingly effective at utilizing equity to generate earnings. These trends suggest improved operational performance and profitability, with a growing ability to generate higher returns on the equity base despite the relatively stable equity amounts.
Return on Assets (ROA)
Celgene Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Trend
- The net income exhibits variability across the five years. It decreased from 2000 million US dollars in 2014 to 1602 million in 2015, suggesting a notable contraction in profit during that period. However, the subsequent years show a recovery and consistent growth, with net income rising to 1999 million in 2016, then to 2940 million in 2017, and reaching 4046 million by the end of 2018. This trajectory indicates a strong rebound and an overall positive growth trend in profitability over the latter part of the period.
- Total Assets Trend
- Total assets increased substantially over the five-year span, starting at 17,340 million US dollars in 2014 and rising sharply to 27,053 million in 2015. Growth continued at a steadier pace in the following years, reaching 28,086 million in 2016, 30,141 million in 2017, and culminating at 35,480 million by the end of 2018. This consistent asset growth reflects ongoing investments and expansion in asset base throughout the period.
- Return on Assets (ROA) Analysis
- The return on assets shows a downward trend in 2015, falling from 11.53% in 2014 to 5.92%, which aligns with the decline in net income despite a significant increase in total assets. This suggests reduced efficiency or profitability from the asset base during that year. However, ROA improved steadily thereafter, rising to 7.12% in 2016, further increasing to 9.75% in 2017, and nearly returning to the initial high level at 11.4% in 2018. The improvement in ROA indicates enhanced profitability in relation to assets, likely driven by the recovery and growing net income.
- Overall Interpretation
- The financial data indicates a period of challenge in 2015 marked by decreased net income and reduced asset profitability despite significant asset growth. However, the company demonstrated strong recovery and growth from 2016 onwards, achieving substantial increases in net income and improving return on assets while continuing to expand its asset base. This pattern reflects successful operational and financial management efforts leading to improved profitability and efficient use of assets by 2018.