Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2005
- Debt to Equity since 2005
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Profitability Ratios (Summary)
Ross Stores Inc., profitability ratios
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
- Gross Profit Margin
- The gross profit margin remained relatively stable from 2017 to 2020, fluctuating modestly between approximately 28.07% and 28.95%. However, there was a significant decline in 2021, dropping sharply to 21.49%, before partially recovering to 27.53% in 2022. This suggests an unusual event or operational challenge in 2021 affecting cost of goods sold or pricing power, with a rebound in the subsequent year.
- Operating Profit Margin
- The operating profit margin exhibited a generally steady trend from 2017 through 2020, holding around the 13.38% to 14.49% range. Similar to the gross margin pattern, the margin collapsed drastically in 2021 to 1.51%, indicating a temporary but severe reduction in operating efficiency or increase in operating expenses. In 2022, the margin showed a strong recovery to 12.33%, though it did not fully return to pre-2021 levels.
- Net Profit Margin
- Net profit margin demonstrated a consistent upward trend from 2017 through 2019, moving from 8.69% to a peak of 10.59%, followed by a slight decrease in 2020 to 10.36%. Similar to other profitability margins, net profit margin plummeted dramatically in 2021 to 0.68%, likely reflecting extraordinary costs or diminished revenues. By 2022, it rebounded notably to 9.11%, showing a recovery in profitability but still slightly below prior peak levels.
- Return on Equity (ROE)
- ROE showed a positive trend over the years 2017 to 2020, increasing steadily from 40.67% to a high of 49.44%. The year 2021 saw a pronounced drop to 2.59%, signaling a severe impact on shareholder returns, perhaps due to decreased net income or increased equity base. In 2022, ROE improved substantially to 42.43%, but remained below the pre-2021 high.
- Return on Assets (ROA)
- ROA rose progressively from 21.05% in 2017 to a peak of 26.14% in 2019, before falling sharply to 17.77% in 2020. The steepest decline occurred in 2021, dropping to 0.67%, in line with other profitability measures. A partial recovery was noted in 2022, with ROA increasing to 12.63%, though still significantly lower than previous levels, reflecting diminished efficiency in asset utilization or profitability during that period.
Return on Sales
Return on Investment
Gross Profit Margin
Ross Stores Inc., gross profit margin calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 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: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Gross profit margin = 100 × Gross profit ÷ Sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Gross Profit Trend
- The gross profit exhibited a generally increasing trend from 2017 to 2020, rising from approximately 3.69 billion to 4.5 billion US dollars. However, there was a notable decline in 2021, where gross profit decreased sharply to around 2.69 billion. This decline was followed by a substantial rebound in 2022, reaching approximately 5.21 billion US dollars, the highest value observed over the period.
- Sales Trend
- Sales figures showed steady growth between 2017 and 2020, increasing from about 12.87 billion to 16.04 billion US dollars. Similar to gross profit, sales declined significantly in 2021 to 12.53 billion, before recovering strongly in 2022 to nearly 18.92 billion US dollars, the peak for the observed period.
- Gross Profit Margin Analysis
- The gross profit margin percentage demonstrated stability around the 28% range from 2017 through 2020, fluctuating modestly between 28.07% and 28.95%. In 2021, the margin contracted sharply to 21.49%, reflecting reduced profitability relative to sales during that year. The margin then increased to 27.53% in 2022, indicating an improvement in cost control or pricing power compared to the previous year, though it did not fully return to prior peak levels.
- Overall Insights
- The data reflects a strong performance trend interrupted in 2021, with declines in both sales and gross profit, as well as a significant compression in gross profit margin. The sharp drops in 2021 could indicate external factors impacting operations or demand during that period. The substantial recovery in 2022 suggests a robust rebound, with sales and gross profit surpassing previous highs, and margin improvement pointing to restored operational efficiency or market conditions. The fluctuations in margin highlight sensitivity of profitability to underlying cost structures or selling prices amid changing sales volumes.
Operating Profit Margin
Ross Stores Inc., operating profit margin calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Operating earnings | |||||||
| 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: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Operating profit margin = 100 × Operating earnings ÷ Sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Earnings
- The operating earnings exhibited a generally increasing trend over the periods analyzed. Starting at 1,802,644 thousand US dollars in early 2017, the figure rose steadily each year, reaching 2,342,868 thousand US dollars by early 2022. There was a slight dip observed in 2021 with a value of 189,710 thousand US dollars, which appears to be an anomaly compared to the overall upward trajectory.
- Sales
- Sales figures showed consistent growth from 12,866,757 thousand US dollars in early 2017 to 18,916,244 thousand US dollars in early 2022. The increase was steady year-on-year until 2021, where a noticeable decrease to 12,531,565 thousand US dollars occurred. However, sales rebounded significantly the following year, surpassing previous highs by a substantial margin. This pattern suggests the impact of a disruptive event or market condition in 2021, followed by a strong recovery in 2022.
- Operating Profit Margin
- The operating profit margin maintained relative stability in the range of approximately 13.38% to 14.49% from 2017 through 2020. A drastic decline to 1.51% was observed in 2021, indicating a sharp reduction in profitability relative to sales during that period. The margin then partially recovered to 12.33% in 2022, though it remained slightly below the levels seen in the earlier years. This fluctuation in margin aligns with the observed dip and rebound in sales and operating earnings, reflecting a period of operational or external challenges.
Net Profit Margin
Ross Stores Inc., net profit margin calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net earnings | |||||||
| 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: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Net profit margin = 100 × Net earnings ÷ Sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Earnings
- Net earnings exhibited an overall upward trend from 2017 to 2022, increasing from approximately 1.12 billion US dollars in 2017 to about 1.72 billion US dollars in 2022. There was consistent growth year over year until 2021, where a significant decline to approximately 85 million US dollars was observed, followed by a strong recovery in 2022.
- Sales
- Sales demonstrated a generally increasing pattern from 2017 through 2022. Beginning at approximately 12.87 billion US dollars in 2017, sales rose steadily and peaked at about 16.04 billion in 2020. In 2021, sales declined notably to approximately 12.53 billion but then increased substantially to 18.92 billion in 2022, reaching the highest value recorded in the period examined.
- Net Profit Margin
- Net profit margin showed considerable fluctuations during the period. From 2017 to 2019, margins increased from 8.69% to 10.59%, indicating improved profitability relative to sales. In 2020, the margin slightly declined to 10.36%, remaining relatively strong. However, in 2021, a sharp drop to 0.68% was observed, reflecting significant pressure on profitability. The margin partially recovered in 2022, reaching 9.11%, suggesting better operational performance but still below the peak margins of previous years.
- Overall Analysis
- The data indicates a pattern of steady growth in both net earnings and sales from 2017 to early 2020. The year 2021 represents an outlier with marked declines in net earnings, sales, and net profit margin, suggesting the occurrence of extraordinary events impacting performance negatively. Such disruptions may have affected operational efficiency, costs, or market demand. The subsequent rebound in 2022 demonstrates a strong recovery across all key financial metrics, although net profit margin has not fully returned to its highest levels observed prior to 2021.
Return on Equity (ROE)
Ross Stores Inc., ROE calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net earnings | |||||||
| Stockholders’ equity | |||||||
| 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: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
ROE = 100 × Net earnings ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Earnings
- The net earnings display a generally upward trend over the analyzed periods, increasing from approximately 1.12 billion USD in 2017 to about 1.73 billion USD in 2022. There is a noticeable decline in 2021, with net earnings dropping to approximately 85.4 million USD, significantly lower than previous years. This suggests the presence of an unusual event or condition impacting profitability for that year. However, the net earnings recover substantially in 2022, reaching the highest value in the observed timeframe.
- Stockholders' Equity
- Stockholders' equity exhibits steady growth throughout the period. Starting from approximately 2.75 billion USD in 2017, it rises consistently to reach around 4.06 billion USD in 2022. The increase is relatively smooth without any significant declines, indicating sustained investment and retained earnings supporting the company's capital base.
- Return on Equity (ROE)
- ROE follows a generally high trajectory from 2017 to 2020, rising from 40.67% to 49.44%, indicating strong profitability relative to equity during these years. However, in 2021, there is a sharp decline to 2.59%, mirroring the drop in net earnings for that year and suggesting diminished returns to shareholders during that period. In 2022, ROE recovers to 42.43%, returning closer to the levels seen prior to 2021 but not reaching the earlier peak.
Return on Assets (ROA)
Ross Stores Inc., ROA calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net earnings | |||||||
| 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: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
ROA = 100 × Net earnings ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Earnings
- Net earnings exhibited a general upward trend from 2017 to 2022, increasing from approximately $1.12 billion to $1.72 billion. A notable decline occurred in 2021, where net earnings dropped sharply to around $85 million, representing a significant deviation from the overall growth trend. After this dip, earnings rebounded strongly in 2022.
- Total Assets
- Total assets consistently increased throughout the period under review, nearly tripling from about $5.31 billion in 2017 to $13.64 billion in 2022. The growth accelerated particularly between 2019 and 2021, indicating substantial asset accumulation during this timeframe.
- Return on Assets (ROA)
- The ROA trend parallels the net earnings performance but reveals volatility and a downward movement post-2019. ROA peaked at 26.14% in 2019 before declining to 17.77% in 2020, then plummeting to 0.67% in 2021. A partial recovery to 12.63% occurred in 2022, suggesting that asset utilization efficiency was significantly impaired in 2021 but improved the following year.
- Overall Analysis
- The data indicates strong growth in net earnings and asset base over the majority of the six-year span, with a pronounced disruption in 2021. The drastic decreases in both net earnings and ROA during 2021 suggest adverse operational or market conditions impacting profitability and asset efficiency. Despite this, the subsequent recovery in 2022 points to a return to more normalized performance levels. The continuous increase in total assets suggests ongoing expansion or investment, even during years where earnings and ROA weakened.