Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Roper Technologies Inc., profitability ratios
Based on: 10-K (reporting date: 2022-12-31), 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).
The profitability profile exhibits a general upward trend in efficiency, characterized by steady improvements in gross margins and a significant surge in net earnings and return metrics by the end of the period.
- Gross Profit Margin
- A consistent expansion is observed, rising from 63.17% in 2018 to 69.86% in 2022. This steady growth indicates enhanced production efficiency or an increase in pricing power over the five-year duration.
- Operating Profit Margin
- Operating efficiency remained relatively stable, fluctuating within a narrow band between 25.62% and 28.38%. A slight contraction occurred during 2020 and 2021 before recovering to a five-year peak in 2022.
- Net Profit Margin
- This metric demonstrates extreme volatility. After fluctuating between 17.18% and 32.94% from 2018 to 2021, the margin increased sharply to 84.60% in 2022, suggesting the influence of substantial non-operating income or one-time financial gains.
- Return on Equity (ROE) and Return on Assets (ROA)
- Both ROE and ROA experienced a decline during 2020 and 2021, with ROA hitting a period low of 3.95% and ROE dropping to 9.06%. However, both metrics rebounded strongly in 2022, reaching 28.34% and 16.84% respectively, closely correlating with the spike in net profit margin.
The convergence of peak values across all profitability ratios in 2022 highlights a year of exceptional financial results. However, the significant disparity between the operating profit margin and the net profit margin in the final year suggests that the bottom-line growth was driven by factors external to core operational activities.
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Gross Profit Margin
Roper Technologies Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | 3,752,800) | 3,917,400) | 3,543,000) | 3,427,100) | 3,279,500) | |
| Net revenues | 5,371,800) | 5,777,800) | 5,527,100) | 5,366,800) | 5,191,200) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 69.86% | 67.80% | 64.10% | 63.86% | 63.17% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Apple Inc. | 43.31% | 41.78% | — | — | — | |
| Arista Networks Inc. | 61.07% | 63.80% | — | — | — | |
| Cisco Systems Inc. | 62.55% | 64.02% | — | — | — | |
| Dell Technologies Inc. | 21.63% | 31.22% | — | — | — | |
| Lumentum Holdings Inc. | 46.05% | 44.93% | — | — | — | |
| Super Micro Computer Inc. | 15.40% | 15.03% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Gross profit margin = 100 × Gross profit ÷ Net revenues
= 100 × 3,752,800 ÷ 5,371,800 = 69.86%
2 Click competitor name to see calculations.
An analysis of the financial performance from 2018 to 2022 reveals a consistent expansion in gross profit margin, despite fluctuations in top-line revenue. The overall trend indicates an improvement in production efficiency or a strategic shift toward higher-margin revenue streams.
- Revenue and Gross Profit Trends
- Net revenues exhibited steady growth from 2018 through 2021, increasing from US$ 5,191,200 thousand to a peak of US$ 5,777,800 thousand. However, a contraction occurred in 2022, with revenues declining to US$ 5,371,800 thousand. Gross profit followed a similar trajectory, growing annually until 2021, where it reached US$ 3,917,400 thousand, before decreasing to US$ 3,752,800 thousand in 2022.
- Gross Profit Margin Expansion
- Despite the volatility in absolute revenue and profit figures, the gross profit margin demonstrated an uninterrupted upward trend over the five-year period. The margin rose from 63.17% in 2018 to 69.86% by the end of 2022. This represents a total increase of 669 basis points, signaling a sustained improvement in the company's ability to manage its direct costs relative to sales.
- Analysis of the 2022 Divergence
- A notable divergence is observed in 2022, where the gross profit margin reached its five-year peak of 69.86% despite a simultaneous decline in both net revenues and absolute gross profit. This suggests that the cost of goods sold decreased at a faster rate than the decline in revenue, reflecting enhanced operational efficiency or a more favorable mix of higher-margin products and services during the period of revenue contraction.
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Operating Profit Margin
Roper Technologies Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Income from operations | 1,524,500) | 1,480,200) | 1,431,100) | 1,498,400) | 1,396,400) | |
| Net revenues | 5,371,800) | 5,777,800) | 5,527,100) | 5,366,800) | 5,191,200) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 28.38% | 25.62% | 25.89% | 27.92% | 26.90% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Apple Inc. | 30.29% | 29.78% | — | — | — | |
| Arista Networks Inc. | 34.86% | 31.37% | — | — | — | |
| Cisco Systems Inc. | 27.09% | 25.76% | — | — | — | |
| Dell Technologies Inc. | 4.60% | 5.46% | — | — | — | |
| Lumentum Holdings Inc. | 17.71% | 30.24% | — | — | — | |
| Super Micro Computer Inc. | 6.45% | 3.48% | — | — | — | |
| Operating Profit Margin, Sector | ||||||
| Technology Hardware & Equipment | 25.11% | 24.80% | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Information Technology | 26.23% | 26.58% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Operating profit margin = 100 × Income from operations ÷ Net revenues
= 100 × 1,524,500 ÷ 5,371,800 = 28.38%
2 Click competitor name to see calculations.
An analysis of operational performance from 2018 to 2022 reveals a period of fluctuating margins characterized by a notable increase in operational efficiency in the final year of the period.
- Net Revenue Trends
- Net revenues exhibited a consistent upward trajectory from 2018 through 2021, rising from 5,191,200 thousand US$ to a peak of 5,777,800 thousand US$. However, a contraction occurred in 2022, with revenues decreasing to 5,371,800 thousand US$, which represents a return to levels similar to those observed in 2019.
- Income from Operations
- Operating income demonstrated a general growth trend over the five-year span, starting at 1,396,400 thousand US$ in 2018 and reaching a maximum of 1,524,500 thousand US$ in 2022. A temporary decline was observed in 2020, where income fell to 1,431,100 thousand US$, before recovering in the subsequent years.
- Operating Profit Margin Performance
- The operating profit margin experienced volatility, ranging from a low of 25.62% in 2021 to a high of 28.38% in 2022. A period of margin compression is evident between 2019 and 2021, where the ratio declined from 27.92% to 25.62%. Notably, the 2022 fiscal year shows a divergence between revenue and profitability; despite the decline in net revenues, the operating profit margin expanded to its highest level in the period. This indicates an improvement in operational leverage or a strategic shift toward higher-margin revenue streams.
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Net Profit Margin
Roper Technologies Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net earnings | 4,544,700) | 1,152,600) | 949,700) | 1,767,900) | 944,400) | |
| Net revenues | 5,371,800) | 5,777,800) | 5,527,100) | 5,366,800) | 5,191,200) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 84.60% | 19.95% | 17.18% | 32.94% | 18.19% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Apple Inc. | 25.31% | 25.88% | — | — | — | |
| Arista Networks Inc. | 30.87% | 28.52% | — | — | — | |
| Cisco Systems Inc. | 22.91% | 21.26% | — | — | — | |
| Dell Technologies Inc. | 5.50% | 3.45% | — | — | — | |
| Lumentum Holdings Inc. | 11.61% | 22.80% | — | — | — | |
| Super Micro Computer Inc. | 5.49% | 3.14% | — | — | — | |
| Net Profit Margin, Sector | ||||||
| Technology Hardware & Equipment | 21.31% | 21.21% | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Information Technology | 22.27% | 23.48% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Net profit margin = 100 × Net earnings ÷ Net revenues
= 100 × 4,544,700 ÷ 5,371,800 = 84.60%
2 Click competitor name to see calculations.
The financial performance between 2018 and 2022 is characterized by relative stability in top-line revenue contrasted with extreme volatility in net earnings and profitability margins.
- Net Revenue Trends
- Net revenues exhibited a steady upward trajectory from 2018 to 2021, increasing from US$ 5,191,200 thousand to a peak of US$ 5,777,800 thousand. However, a reversal occurred in 2022, with revenues declining to US$ 5,371,800 thousand, returning to levels similar to those observed in 2019.
- Net Earnings Fluctuations
- Net earnings demonstrated significant instability throughout the period. Following an increase in 2019, earnings dropped sharply in 2020 to US$ 949,700 thousand. While a moderate recovery was noted in 2021, 2022 saw an exponential surge to US$ 4,544,700 thousand, representing a substantial departure from the historical earnings baseline.
- Net Profit Margin Analysis
- The net profit margin mirrored the volatility of net earnings. After fluctuating between 17.18% and 32.94% from 2018 to 2021, the margin escalated to 84.60% in 2022. Given that this margin expansion occurred simultaneously with a decrease in net revenues, the spike suggests the influence of non-operating income or a significant one-time gain rather than organic operational efficiency.
In summary, the divergence between stagnant revenue and an abrupt increase in net profit in 2022 indicates that profitability during the final year of the period was driven by factors external to core revenue generation.
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Return on Equity (ROE)
Roper Technologies Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net earnings | 4,544,700) | 1,152,600) | 949,700) | 1,767,900) | 944,400) | |
| Stockholders’ equity | 16,037,800) | 11,563,800) | 10,479,800) | 9,491,900) | 7,738,500) | |
| Profitability Ratio | ||||||
| ROE1 | 28.34% | 9.97% | 9.06% | 18.63% | 12.20% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Apple Inc. | 196.96% | 150.07% | — | — | — | |
| Arista Networks Inc. | 27.68% | 21.13% | — | — | — | |
| Cisco Systems Inc. | 29.70% | 25.66% | — | — | — | |
| Dell Technologies Inc. | — | 131.10% | — | — | — | |
| Lumentum Holdings Inc. | 10.61% | 20.14% | — | — | — | |
| Super Micro Computer Inc. | 20.00% | 10.20% | — | — | — | |
| ROE, Sector | ||||||
| Technology Hardware & Equipment | 122.76% | 96.47% | — | — | — | |
| ROE, Industry | ||||||
| Information Technology | 38.03% | 41.64% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
ROE = 100 × Net earnings ÷ Stockholders’ equity
= 100 × 4,544,700 ÷ 16,037,800 = 28.34%
2 Click competitor name to see calculations.
The return on equity (ROE) from 2018 to 2022 exhibits significant volatility, characterized by a sharp contraction in 2020 followed by a substantial surge in 2022. While stockholders' equity maintained a consistent upward trajectory throughout the period, net earnings fluctuated considerably, acting as the primary driver for the variance in profitability ratios.
- Return on Equity Trends
- ROE increased from 12.20% in 2018 to 18.63% in 2019, before falling to a period low of 9.06% in 2020. After a marginal recovery to 9.97% in 2021, the ratio experienced a sharp acceleration to 28.34% by December 31, 2022, marking the highest level of efficiency in equity utilization within the observed timeframe.
- Net Earnings Volatility
- Net earnings demonstrated an inconsistent growth pattern, rising to 1,767,900 thousand USD in 2019 before dropping to 949,700 thousand USD in 2020. The most notable change occurred between 2021 and 2022, where net earnings grew from 1,152,600 thousand USD to 4,544,700 thousand USD, a spike that directly catalyzed the dramatic increase in ROE.
- Equity Base Expansion
- Stockholders' equity showed steady and uninterrupted growth, rising from 7,738,500 thousand USD in 2018 to 16,037,800 thousand USD in 2022. This continuous expansion of the capital base typically requires proportional increases in net income to maintain or improve ROE; the data indicates that earnings growth failed to keep pace with equity expansion between 2019 and 2021, but significantly outperformed it in 2022.
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Return on Assets (ROA)
Roper Technologies Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net earnings | 4,544,700) | 1,152,600) | 949,700) | 1,767,900) | 944,400) | |
| Total assets | 26,980,800) | 23,713,900) | 24,024,800) | 18,108,900) | 15,249,500) | |
| Profitability Ratio | ||||||
| ROA1 | 16.84% | 4.86% | 3.95% | 9.76% | 6.19% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Apple Inc. | 28.29% | 26.97% | — | — | — | |
| Arista Networks Inc. | 19.96% | 14.66% | — | — | — | |
| Cisco Systems Inc. | 12.57% | 10.86% | — | — | — | |
| Dell Technologies Inc. | 6.00% | 2.63% | — | — | — | |
| Lumentum Holdings Inc. | 4.78% | 11.19% | — | — | — | |
| Super Micro Computer Inc. | 8.90% | 4.99% | — | — | — | |
| ROA, Sector | ||||||
| Technology Hardware & Equipment | 21.50% | 18.83% | — | — | — | |
| ROA, Industry | ||||||
| Information Technology | 14.33% | 14.52% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
ROA = 100 × Net earnings ÷ Total assets
= 100 × 4,544,700 ÷ 26,980,800 = 16.84%
2 Click competitor name to see calculations.
The financial performance from 2018 to 2022 is characterized by significant volatility in net earnings and a steady expansion of the asset base, leading to fluctuating efficiency in asset utilization as measured by the Return on Assets (ROA).
- Asset Base Expansion
- Total assets demonstrated a consistent upward trajectory, growing from 15.25 billion US$ in 2018 to 26.98 billion US$ by the end of 2022. This represents a substantial increase in the company's resource base, with the most significant growth occurring between 2019 and 2020.
- Net Earnings Volatility
- Net earnings exhibited high variability throughout the period. After a peak in 2019 at 1.77 billion US$, earnings contracted sharply in 2020 to 949.7 million US$. A moderate recovery followed in 2021, culminating in a substantial surge to 4.54 billion US$ in 2022, marking the highest earnings level in the analyzed period.
- Return on Assets (ROA) Trends
- The ROA mirrored the instability of net earnings. The ratio rose to 9.76% in 2019 before dropping to a period low of 3.95% in 2020, primarily driven by the simultaneous increase in total assets and the decline in net income. However, a sharp reversal occurred in 2022, where ROA peaked at 16.84%. This suggests a dramatic improvement in the efficiency of generating profits from the company's assets during the final year of the period.
The divergence between the steady growth of total assets and the erratic movement of net earnings indicates that profitability drivers were not linearly correlated with asset acquisition. The 2022 results signify a pivot toward high asset productivity, as the increase in net earnings far outpaced the growth in the asset base.
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