Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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Profitability Ratios (Summary)
O’Reilly Automotive Inc., profitability ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The analysis of the annual financial data reveals several notable trends in the profitability and efficiency ratios over the five-year period.
- Gross Profit Margin
- The gross profit margin remained relatively stable, fluctuating slightly between 52.44% and 53.15%. This indicates consistent pricing strategy and cost management in relation to sales, with a minor dip in 2020 followed by a slight recovery in 2021.
- Operating Profit Margin
- The operating profit margin showed a gradual improvement, increasing from 19.22% in 2017 to 21.89% in 2021. Notably, there was a marked increase in 2020, which continued into 2021, suggesting enhanced operational efficiency or cost controls beyond the gross profit level.
- Net Profit Margin
- The net profit margin also displayed an upward trend, rising steadily from 12.63% in 2017 to 16.24% in 2021. This consistent increase indicates growing overall profitability and effective management of non-operating items such as taxes and interest expenses.
- Return on Equity (ROE)
- The ROE figures showed extraordinary volatility, with a dramatic spike to 1249.34% in 2020 after high values in preceding years. This extreme fluctuation likely reflects significant changes in equity structure or profitability leverage effects rather than a steady operational improvement. The lack of data for 2021 makes it difficult to assess if this was a short-term anomaly.
- Return on Assets (ROA)
- The ROA fluctuated moderately, beginning at 14.97% in 2017, dipping to 12.98% in 2019, then rising to 18.47% by 2021. This pattern suggests some variability in asset utilization efficiency but overall improvement towards the end of the period, indicating better use of assets to generate profit.
Overall, the data depicts a company maintaining stable gross profitability while achieving incremental improvements in operational and net profitability margins. The ROA trend suggests increasing efficiency in asset use despite previous fluctuations. The ROE volatility signals potential structural or extraordinary events affecting equity returns, warranting further investigation.
Return on Sales
Return on Investment
Gross Profit Margin
O’Reilly Automotive Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | ||||||
| Sales | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Gross profit margin = 100 × Gross profit ÷ Sales
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data over the five-year period indicates a consistent increase in both gross profit and sales, reflecting an overall positive growth trend.
- Gross Profit
- Gross profit increased steadily each year, rising from approximately $4.72 billion in 2017 to about $7.02 billion in 2021. This represents a growth of nearly 49% over the period, indicating sustained improvement in the company's profitability from core operations.
- Sales
- Sales figures also show a continuous upward trajectory, growing from roughly $8.98 billion in 2017 to approximately $13.33 billion in 2021. This increase of almost 48% aligns closely with the rise in gross profit, suggesting balanced growth in revenue and profitability.
- Gross Profit Margin
- The gross profit margin exhibited relative stability throughout the observed period, fluctuating slightly but remaining close to the 52-53% range. The margin began at 52.58% in 2017, peaked at 53.15% in 2019, and ended at 52.67% in 2021. These minor variations indicate consistent operational efficiency and cost control relative to sales.
Overall, the data reflects a company with strong sales growth accompanied by proportional increases in gross profit, while maintaining a stable gross profit margin. This suggests effective management of costs and a steady ability to generate profit from sales over the time span analyzed.
Operating Profit Margin
O’Reilly Automotive Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Operating income | ||||||
| Sales | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
| Operating Profit Margin, Sector | ||||||
| Consumer Discretionary Distribution & Retail | ||||||
| Operating Profit Margin, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Operating profit margin = 100 × Operating income ÷ Sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Income
- The operating income exhibited a consistent upward trend from 2017 to 2021. Beginning at approximately 1.73 billion US dollars in 2017, it increased steadily each year, reaching nearly 2.92 billion US dollars by the end of 2021. The most significant increase occurred between 2019 and 2020, where operating income rose by over 26%, indicating improved operational efficiency or increased sales volume during this period.
- Sales
- Sales revenue followed a similar positive trajectory over the five-year span, growing from roughly 8.98 billion US dollars in 2017 to about 13.33 billion US dollars in 2021. This consistent growth reflects sustained demand or expansion in market share. The year-over-year increases averaged around 6 to 13%, with the largest absolute gain observed between 2020 and 2021, which corresponds with the largest increases in operating income.
- Operating Profit Margin
- The operating profit margin experienced minor fluctuations but generally showed improvement over the period analyzed. Starting at 19.22% in 2017, it slightly declined in 2018 and 2019 to just under 19%, then rose to 20.85% in 2020 and 21.89% in 2021. This upward movement in margin percentage during the last two years suggests enhanced profitability and better cost management relative to sales.
- Summary
- Overall, the data indicates robust financial performance characterized by consistent growth in sales and operating income, accompanied by a gradual improvement in operating profit margin. The notable improvements in operating efficiency and profitability in 2020 and 2021 imply effective management strategies amid possibly challenging external conditions.
Net Profit Margin
O’Reilly Automotive Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | ||||||
| Sales | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
| Net Profit Margin, Sector | ||||||
| Consumer Discretionary Distribution & Retail | ||||||
| Net Profit Margin, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net profit margin = 100 × Net income ÷ Sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- The net income demonstrated a consistent upward trajectory from 2017 through 2021. Starting at 1,133,804 thousand US dollars in 2017, it increased annually, reaching 2,164,685 thousand US dollars by 2021. The largest year-over-year growth was observed between 2019 and 2020, suggesting an accelerated profit expansion during this period.
- Sales
- Sales figures similarly showed steady growth each year, beginning at 8,977,726 thousand US dollars in 2017 and rising to 13,327,563 thousand US dollars in 2021. Yearly increments indicate a robust sales performance, with the highest increases also noticeable between 2019 and 2020, aligning with the growth pattern seen in net income.
- Net Profit Margin
- The net profit margin, expressed as a percentage, increased gradually over the period. It rose from 12.63% in 2017 to 16.24% in 2021, indicating improved profitability efficiency relative to sales. The margin growth was steady, with a slight dip noted in 2019 but thereafter recovering and continuing upward.
Return on Equity (ROE)
O’Reilly Automotive Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | ||||||
| Shareholders’ equity (deficit) | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
| ROE, Sector | ||||||
| Consumer Discretionary Distribution & Retail | ||||||
| ROE, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
ROE = 100 × Net income ÷ Shareholders’ equity (deficit)
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- The net income demonstrates a consistent upward trend over the five-year period. Starting at approximately 1.13 billion US dollars in 2017, it increased annually to reach about 2.16 billion US dollars in 2021. This indicates a strong growth trajectory in profitability, nearly doubling the net income within the timeframe.
- Shareholders’ Equity
- Shareholders' equity shows a declining trend over the years. It starts at around 653 million US dollars in 2017, decreases moderately until 2019, followed by a significant drop in 2020 and a negative balance recorded in 2021 at approximately -66 million US dollars. This decline suggests increasing financial leverage or accumulated losses impacting the equity base.
- Return on Equity (ROE)
- ROE values are irregular and extremely volatile. From 173.62% in 2017, it sharply rises to 374.5% in 2018 and slightly declines to 350.09% in 2019. In 2020, ROE surges to an exceptionally high 1249.34%, reflecting extremely high returns relative to shareholders' equity, likely influenced by the drastic decrease in equity noted in that year. Data for 2021 is missing. The volatility and extremely high values suggest that the equity base's deterioration has distorted this profitability metric.
Return on Assets (ROA)
O’Reilly Automotive Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
| ROA, Sector | ||||||
| Consumer Discretionary Distribution & Retail | ||||||
| ROA, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data presents several key trends over the five-year period.
- Net Income
- There is a consistent upward trajectory in net income from 2017 to 2021. The figure increased from approximately 1.13 billion USD in 2017 to about 2.16 billion USD in 2021, representing a near doubling over the span of five years. This indicates strong profitability growth and improved operational performance.
- Total Assets
- Total assets also increased steadily, growing from around 7.57 billion USD in 2017 to roughly 11.72 billion USD in 2021. The most notable jump occurred between 2018 and 2019, suggesting significant asset acquisition or revaluation during that period. Asset growth levels off somewhat from 2020 to 2021, indicating a stabilization phase.
- Return on Assets (ROA)
- ROA demonstrates some variability but generally maintains a positive and healthy range throughout. After a peak of 16.6% in 2018, ROA dipped to approximately 13% in 2019, then recovered to over 18% by 2021. This fluctuation suggests changes in asset utilization efficiency, but the ending level indicates improved profitability relative to asset base.
Overall, the data reflects a company experiencing robust earnings growth, supported by asset base expansion and improving returns on those assets, particularly in the latest reporting period. The temporary decline in ROA around 2019 merits consideration but does not indicate a lasting negative impact on financial health.