Analysis of Profitability Ratios
Quarterly Data
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
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Profitability Ratios (Summary)
CoStar Group Inc., profitability ratios (quarterly data)
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
The financial data reveals several notable trends across key profitability and efficiency metrics over the examined periods.
- Gross Profit Margin
- There is a consistent upward trend in gross profit margin from the first available data point in March 2018 through June 2023. Starting at approximately 77.35% in March 2018, the margin steadily increased, peaking around 81.82% in June 2022 before a slight decline to 80.65% by June 2023. This indicates improving efficiency in production or service delivery relative to revenue over time.
- Operating Profit Margin
- Operating profit margin experienced growth from around 23% in early 2018, reaching a high of approximately 27.47% in December 2018. Following this peak, there was a downward trend with fluctuations, dropping to a low near 15.68% in June 2023. Although it partially recovered at mid-2021, the overall pattern suggests increasing operational costs or other factors reducing operating profitability in recent quarters.
- Net Profit Margin
- The net profit margin also rose from 20% in March 2018 to a peak above 23% by December 2018, but then declined significantly through 2020. From 2021 onwards, it stabilized in the mid-teens percentages, fluctuating roughly between 12.5% and 17%, with a modest increase in 2023. This reflects challenges reducing bottom-line profitability, despite some recovery in recent periods.
- Return on Equity (ROE)
- ROE followed a similar pattern, increasing moderately from about 7.9% in early 2018 to a peak of around 9.41% by the end of 2018. Afterward, there was a sharp decline through 2020, with stabilization occurring at roughly 4–5.5% thereafter. This suggests that the company’s ability to generate profit from shareholders’ equity weakened significantly but showed resilience with slight improvements recently.
- Return on Assets (ROA)
- ROA trends mirror those of ROE, with initial growth to over 8% in December 2018, followed by a decline and stabilization in the 3–4.5% range from 2020 onward. The post-2020 period shows gradual improvement, indicating enhanced efficiency in asset utilization despite earlier setbacks.
Overall, the data reveals a period of strong profitability and operational performance up to late 2018, followed by deterioration through 2020, likely influenced by external and internal challenges. Subsequent years show signs of stabilization and modest recovery in profitability and returns, while gross margin remains robust, suggesting solid fundamental cost management at the direct cost level despite pressures at the operating and net levels.
Return on Sales
Return on Investment
Gross Profit Margin
CoStar Group Inc., gross profit margin calculation (quarterly data)
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2023 Calculation
Gross profit margin = 100
× (Gross profitQ2 2023
+ Gross profitQ1 2023
+ Gross profitQ4 2022
+ Gross profitQ3 2022)
÷ (RevenuesQ2 2023
+ RevenuesQ1 2023
+ RevenuesQ4 2022
+ RevenuesQ3 2022)
= 100 × ( + + + )
÷ ( + + + )
=
The financial data reveals a consistent upward trend in both gross profit and revenues over the analyzed periods. Revenues have steadily increased from approximately $273.7 million in the first quarter of 2018 to about $605.9 million by the second quarter of 2023. This growth represents more than a doubling of revenue within this timeframe, indicating strong business expansion.
Gross profit shows a similar positive trajectory, rising from around $211.2 million in early 2018 to nearly $493.5 million by mid-2023. The increase in gross profit is closely aligned with revenue growth, confirming that the company has maintained profitability while scaling operations.
Examining the gross profit margin percentages, which are available starting from the first quarter of 2019, there is an observable improvement and relative stabilization over time. The margin increased from approximately 77.35% in March 2019 to a peak exceeding 81.8% in several quarters thereafter, notably around mid-2022. Despite minor fluctuations, the margin mostly remained within the range of about 80% to 81.8%, reflecting effective cost management relative to revenue.
This sustained margin expansion implies that the company has optimized its cost structure or enhanced pricing power, resulting in higher profitability per revenue dollar. The combination of rising revenues, improving gross profit, and stable to increasing gross profit margins suggests robust operational efficiency and successful execution of growth strategies.
Operating Profit Margin
CoStar Group Inc., operating profit margin calculation (quarterly data)
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2023 Calculation
Operating profit margin = 100
× (Income from operationsQ2 2023
+ Income from operationsQ1 2023
+ Income from operationsQ4 2022
+ Income from operationsQ3 2022)
÷ (RevenuesQ2 2023
+ RevenuesQ1 2023
+ RevenuesQ4 2022
+ RevenuesQ3 2022)
= 100 × ( + + + )
÷ ( + + + )
=
- Revenue Trends
- The revenues exhibit a consistent upward trajectory from March 2018 to June 2023. Starting at approximately 273.7 million USD in March 2018, revenues steadily increased each quarter, reaching over 605.9 million USD by June 2023. This reflects sustained growth across the entire period, indicating positive business expansion and market demand.
- Income from Operations Trends
- Income from operations shows more volatility compared to revenues. Initially, from March 2018 through December 2018, the operating income rose from about 53.4 million USD to a peak of 105.7 million USD. However, from 2019 onwards, income from operations displayed fluctuations without a clear consistent upward or downward pattern. Significant dips are observable in the quarters ending March and December of 2020, with a low of approximately 55.2 million USD in December 2020. Recovery periods followed, with peaks returning towards the end of 2021 at around 140.4 million USD, but thereafter, income from operations generally declined, falling to roughly 72.2 million USD by March 2023 before a slight increase to 79.1 million USD in June 2023.
- Operating Profit Margin Analysis
- The operating profit margin values, available from September 2018 onward, exhibit a downward trend across the period. Early margins ranged in the mid to high twenties percent (approximately 23% to 27%) during 2018 and 2019. From 2020 forward, margins declined progressively, reaching around 17.4% by December 2020. Margins showed minor fluctuations but generally remained below 23% throughout 2021 and 2022, with a continuous decline into 2023, falling to 15.7% by June 2023. This indicates diminishing operational efficiency or rising costs relative to revenues despite the revenue growth.
- Overall Insights
- There is a clear pattern of strong revenue growth, nearly doubling over the five-year period. However, income from operations and operating profit margins do not reflect the same consistent improvement. Volatility in operating income coupled with a declining profit margin suggests increasing operational challenges or cost pressures that have affected profitability. The divergence between rising revenues and falling profitability metrics may warrant further investigation into cost management, pricing strategies, or changes in the product/service mix affecting margins.
Net Profit Margin
CoStar Group Inc., net profit margin calculation (quarterly data)
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2023 Calculation
Net profit margin = 100
× (Net incomeQ2 2023
+ Net incomeQ1 2023
+ Net incomeQ4 2022
+ Net incomeQ3 2022)
÷ (RevenuesQ2 2023
+ RevenuesQ1 2023
+ RevenuesQ4 2022
+ RevenuesQ3 2022)
= 100 × ( + + + )
÷ ( + + + )
=
The analyzed financial data exhibits several notable trends over the observed quarters, reflecting both the operational performance and profitability dynamics.
- Net Income Trends
- Net income shows fluctuations across the time periods with an overall upward tendency. Starting at approximately 52.2 million in the first quarter of 2018, it experiences peaks and valleys, reaching a high of about 124.4 million in the first quarter of 2023. Significant increases are evident particularly from late 2021 through early 2023, indicating a period of improving profitability. However, dips occur sporadically, such as in late 2020, potentially signaling external challenges or operational difficulties at those times.
- Revenue Growth
- Revenue demonstrates a consistent and steady growth trajectory throughout the quarters analyzed. Beginning just below 274 million in early 2018, revenue increases each quarter, surpassing 605 million by mid-2023. This upward trend suggests expanding business operations or increased market demand over the period, showing resilience even during mid-2020 when other financial metrics faced headwinds.
- Net Profit Margin Behavior
- Net profit margins are only available from March 31, 2019, onward and start near 20%, subsequently trending higher and peaking above 23% towards the end of 2019. Following this peak, the margin gradually declines into 2020, reaching a low of approximately 13.25% by mid-2021, possibly reflecting adverse conditions impacting profitability despite growing revenue. Post-mid-2021, margins partly recover and stabilize in the range of roughly 15% to nearly 17%, suggesting improved cost management or operational efficiencies. The margin shows minor variability but no large swings, indicating relatively stable profitability ratios in recent quarters.
- Overall Observations
- The data suggests robust revenue growth driving the company’s financial performance, supported by positive net income expansion over time. Though net profit margins experienced some contraction during the pandemic period, the rebound and stabilization observed imply successful adjustment to changing market conditions. The stronger net income results in the latest quarters highlight effective leverage of revenue gains or improved expense control.
Return on Equity (ROE)
CoStar Group Inc., ROE calculation (quarterly data)
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2023 Calculation
ROE = 100
× (Net incomeQ2 2023
+ Net incomeQ1 2023
+ Net incomeQ4 2022
+ Net incomeQ3 2022)
÷ Stockholders’ equity
= 100 × ( + + + )
÷ =
- Net Income Trends
- The net income exhibited notable volatility over the observed periods. Initially, from March 2018 to December 2018, net income increased from approximately $52.2 million to $83.5 million, indicating a phase of growth. This upward momentum was sustained into the first quarter of 2019, peaking near $87.9 million at year-end 2019. However, in 2020, there was a marked decline, dropping to around $35.8 million by December 2020, reflecting a significant reduction in profitability during that year. Recovery began in 2021 with net income rising to $92.9 million by December. Despite some fluctuations, the net income maintained generally elevated levels in 2022 and into mid-2023, with values consistently above $72 million and reaching a high of approximately $124.4 million in March 2023, indicating improved earnings performance.
- Stockholders’ Equity Patterns
- Stockholders’ equity demonstrated a steady increasing trend throughout the entire period. Starting from about $2.8 billion in March 2018, equity increased consistently each quarter without notable decline, reaching approximately $3.4 billion by December 2019. A significant jump is observed around the first half of 2020, with equity climbing from roughly $3.46 billion in March 2020 to over $5.22 billion by June 2020, suggesting capital inflows, retained earnings accumulation, or other equity transactions. Post this increase, equity growth continued steadily, reaching around $7.1 billion by June 2023, indicating reinforcing company capitalization and strengthening financial position.
- Return on Equity (ROE) Progression
- The return on equity data begins from the first quarter of 2019. Initial values show a rising trend from 7.89% in March 2019, peaking at 9.41% by December 2019. In 2020, there is a distinct downward trend, with ROE dropping sharply to a low near 4.15% by March 2021, coinciding with the reduced net income in this period. Starting from mid-2021, ROE experienced a moderate recovery, climbing back gradually to values above 5% by 2023. Although the ROE improvement indicates better profitability in relation to equity, it remains below the highs seen prior to 2020, potentially reflecting a more cautious or less aggressive profit generation relative to the enhanced equity base.
- Comprehensive Insights
- The financial data indicate that despite fluctuations in net income, particularly a significant drop in 2020 likely linked to external disruptive events, the company's equity base has continuously expanded, pointing towards sustained capital strengthening. The substantial increase in stockholders’ equity in mid-2020 may underpin strategic financing actions or retained earnings accumulation to support business recovery and growth. The ROE trends align closely with net income movements, showing a reduction when profitability was constrained and partial recovery as earnings improved. However, ROE remains moderate compared to earlier periods, likely affected by the enlarged equity base. Overall, the company demonstrates resilience with solid equity growth and recovering profitability, though with some caution regarding efficiency in generating returns from equity.
Return on Assets (ROA)
CoStar Group Inc., ROA calculation (quarterly data)
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2023 Calculation
ROA = 100
× (Net incomeQ2 2023
+ Net incomeQ1 2023
+ Net incomeQ4 2022
+ Net incomeQ3 2022)
÷ Total assets
= 100 × ( + + + )
÷ =
The financial data exhibits several phases of performance variation over the periods presented, highlighting fluctuations in profitability and asset growth.
- Net Income
- Net income demonstrated an overall upward trend from early 2018 through mid-2019, starting at 52,231 thousand US dollars and increasing to a peak of 87,927 thousand US dollars by the end of 2019. However, in 2020, there was a noticeable decline, with net income dropping to as low as 35,789 thousand US dollars by December 2020, reflecting a significant downturn, possibly linked to external economic factors affecting the operations during that period.
- From 2021 onwards, net income showed signs of recovery and growth, rebounding to 92,900 thousand US dollars by the end of 2021 and continuing to fluctuate but generally increasing in 2022 and 2023. The highest net income within this range reached 124,372 thousand US dollars in March 2023, indicating strong profitability in the latest period.
- Total Assets
- Total assets steadily increased throughout the entire timeline, rising from approximately 3,095,100 thousand US dollars at the start of 2018 to over 8,691,674 thousand US dollars by mid-2023. This growth reflects ongoing asset accumulation or acquisitions, with notable acceleration between March 2020 and June 2020, where assets jumped significantly, nearly doubling the previous level, suggesting major investments or expansion activities during that period.
- Return on Assets (ROA)
- ROA data begins from March 2019 and shows an initial improvement from 7.19% to a peak of 8.36% by December 2019, indicating increasing efficiency in asset utilization for profit generation.
- Subsequently, ROA declined through 2020, reaching a low near 3.28% by December 2020, consistent with the reduction seen in net income during this year, reflecting diminished returns on the growing asset base.
- The ratio stabilizes around 3.2% to 4.5% during 2021 to mid-2023, showing moderate recovery and relative stability in asset profitability, albeit not reaching the higher levels observed in 2019.
Overall, the data displays a pattern of significant asset growth alongside fluctuating profitability and efficiency metrics. The downturn in earnings and ROA during 2020 contrasts with substantial asset increases, suggesting a period of investment or expansion that temporarily outpaced earnings. Subsequent recovery in net income and modest improvements in ROA imply improving performance and asset utilization efficiency in recent periods.