Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Allergan Inc., profitability ratios
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
The financial performance from 2010 to 2014 is characterized by a significant shift in profitability, transitioning from a state of near-zero net returns in 2010 to a consistently high-margin profile. A marked improvement in operational efficiency and bottom-line returns is evident starting in 2011, with a general upward trend sustained through 2014.
- Margin Performance
- Gross profit margins demonstrated a steady and uninterrupted increase, rising from 82.16% in 2010 to 86.60% in 2014. This indicates a consistent improvement in the cost of goods sold relative to revenue. Operating profit margins experienced a sharp increase between 2010 and 2011, jumping from 5.37% to 25.53%, and remained relatively stable thereafter, peaking at 29.19% in 2013.
- Net Profitability and Returns
- Net profit margin, Return on Equity (ROE), and Return on Assets (ROA) all exhibited a similar trajectory, starting at near-zero values in 2010 and surging in 2011. While a temporary decline was observed across all three metrics in 2013—with the net profit margin dipping to 15.90%, ROE to 15.24%, and ROA to 9.32%—a strong recovery occurred in 2014. By the end of the period, the net profit margin reached a peak of 21.39%, ROE reached 19.66%, and ROA reached 12.28%.
- Comparative Analysis of Returns
- The divergence between ROE and ROA suggests the strategic use of financial leverage to amplify shareholder returns. While ROA remained healthy, peaking at 12.28%, the ROE consistently outperformed it, reaching a maximum of 19.66% in 2014. The synchronized movement of these ratios with the net profit margin indicates that the fluctuations in returns were primarily driven by net income volatility rather than significant changes in the asset or equity base.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Return on Sales
Return on Investment
Gross Profit Margin
Allergan Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | 6,171,300) | 5,285,000) | 4,802,000) | 4,470,800) | 3,959,600) | |
| Product net sales | 7,126,100) | 6,197,500) | 5,708,800) | 5,347,100) | 4,819,600) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 86.60% | 85.28% | 84.12% | 83.61% | 82.16% | |
| 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: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
Gross profit margin = 100 × Gross profit ÷ Product net sales
= 100 × 6,171,300 ÷ 7,126,100 = 86.60%
2 Click competitor name to see calculations.
The financial performance from 2010 to 2014 demonstrates a sustained increase in both absolute profitability and margin efficiency. A positive correlation is observed between the growth of product net sales and the expansion of the gross profit margin, indicating high scalability in the cost structure.
- Revenue and Gross Profit Growth
- Product net sales grew consistently each year, rising from US$ 4,819,600 thousand in 2010 to US$ 7,126,100 thousand in 2014. Gross profit followed a similar upward trajectory, increasing from US$ 3,959,600 thousand to US$ 6,171,300 thousand over the same period. The growth in gross profit slightly outpaced the growth in net sales, contributing directly to the improvement in profitability ratios.
- Gross Profit Margin Trend
- The gross profit margin exhibited a steady annual increase, beginning at 82.16% in 2010 and climbing to 86.60% by December 31, 2014. This sequential improvement suggests a consistent enhancement in the management of the cost of goods sold relative to revenue, which may reflect increased pricing power, favorable shifts in the product mix, or improved operational efficiencies in production.
- Profitability Analysis
- The expansion of the margin by approximately 444 basis points over the five-year period signifies a strong ability to manage direct costs while scaling operations. The consistent nature of this growth indicates a stable and predictable improvement in the core profitability of the product portfolio.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Operating Profit Margin
Allergan Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Operating income | 2,009,300) | 1,809,300) | 1,613,300) | 1,365,100) | 258,600) | |
| Product net sales | 7,126,100) | 6,197,500) | 5,708,800) | 5,347,100) | 4,819,600) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 28.20% | 29.19% | 28.26% | 25.53% | 5.37% | |
| 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: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
Operating profit margin = 100 × Operating income ÷ Product net sales
= 100 × 2,009,300 ÷ 7,126,100 = 28.20%
2 Click competitor name to see calculations.
Between 2010 and 2014, a consistent upward trajectory was observed in both product net sales and operating income. Product net sales grew steadily from 4.82 billion US dollars in 2010 to 7.13 billion US dollars by 2014. During the same period, operating income experienced an even more pronounced increase, rising from 258.6 million US dollars to 2.01 billion US dollars, indicating that operating expenses were managed efficiently relative to revenue growth.
- Operating Profit Margin Expansion
- A significant shift in profitability occurred between 2010 and 2011, where the operating profit margin rose sharply from 5.37% to 25.53%. This rapid expansion suggests a substantial improvement in operational efficiency or a shift in the cost structure during that fiscal transition.
- Margin Peak and Stabilization
- Following the initial surge, the margin continued to climb, reaching a peak of 29.19% in 2013. In 2014, a slight contraction to 28.20% was noted, representing a stabilization phase after three years of consecutive growth.
- Revenue and Income Correlation
- The divergence between the steady growth of net sales and the aggressive growth of operating income from 2010 to 2012 underscores an increase in operating leverage, allowing a larger percentage of each sales dollar to contribute to operating profit.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Net Profit Margin
Allergan Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net earnings attributable to Allergan, Inc. | 1,524,200) | 985,100) | 1,098,800) | 934,500) | 600) | |
| Product net sales | 7,126,100) | 6,197,500) | 5,708,800) | 5,347,100) | 4,819,600) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 21.39% | 15.90% | 19.25% | 17.48% | 0.01% | |
| 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: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
Net profit margin = 100 × Net earnings attributable to Allergan, Inc. ÷ Product net sales
= 100 × 1,524,200 ÷ 7,126,100 = 21.39%
2 Click competitor name to see calculations.
The financial performance from 2010 to 2014 is characterized by consistent top-line growth and a significant recovery in bottom-line profitability. Product net sales demonstrated a steady upward trajectory, increasing every year from $4.82 billion in 2010 to $7.13 billion in 2014.
- Net Profit Margin Analysis
- A dramatic increase in profit margin is observed between 2010 and 2011, shifting from a negligible 0.01% to 17.48%. While a slight contraction to 15.90% occurred in 2013, the margin rebounded strongly in 2014 to reach a peak of 21.39%, indicating enhanced operational efficiency and improved cost management over the five-year period.
- Net Earnings Performance
- Net earnings attributable to the company experienced substantial growth, rising from $600 thousand in 2010 to $1.52 billion in 2014. This growth was not linear; a peak of $1.09 billion was reached in 2012, followed by a moderate decline to $985.1 million in 2013, before surging to its highest level in 2014.
- Correlation Between Sales and Profitability
- The data indicates that while sales grew consistently, profitability fluctuated more dynamically. The ability to expand the net profit margin to 21.39% in 2014, alongside the highest recorded sales, suggests a positive scaling effect where earnings growth outpaced revenue growth in the final year of the analyzed period.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Return on Equity (ROE)
Allergan Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net earnings attributable to Allergan, Inc. | 1,524,200) | 985,100) | 1,098,800) | 934,500) | 600) | |
| Total Allergan, Inc. stockholders’ equity | 7,753,000) | 6,463,200) | 5,837,100) | 5,309,600) | 4,757,700) | |
| Profitability Ratio | ||||||
| ROE1 | 19.66% | 15.24% | 18.82% | 17.60% | 0.01% | |
| 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: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
ROE = 100 × Net earnings attributable to Allergan, Inc. ÷ Total Allergan, Inc. stockholders’ equity
= 100 × 1,524,200 ÷ 7,753,000 = 19.66%
2 Click competitor name to see calculations.
The period between 2010 and 2014 is characterized by a substantial recovery in profitability and a consistent expansion of the equity base. Following a period of negligible earnings in 2010, a strong upward trajectory in net income and shareholder returns is observed over the subsequent four years.
- Net Earnings Trend
- A significant surge in net earnings occurred between 2010 and 2011, with figures rising from 600 thousand USD to 934.5 million USD. While a slight contraction was noted in 2013, earnings resumed growth in 2014, reaching a peak of 1.52 billion USD, indicating a robust capacity for profit generation.
- Equity Accumulation
- Total stockholders' equity demonstrated a steady and uninterrupted increase throughout the analyzed period. The equity base grew from 4.76 billion USD in 2010 to 7.75 billion USD by the end of 2014, reflecting consistent capital accumulation and a strengthened financial position.
- Return on Equity (ROE) Performance
- The ROE exhibited a dramatic increase from a marginal 0.01% in 2010 to 17.60% in 2011. This efficiency remained relatively stable, fluctuating between 15.24% and 18.82% in 2012 and 2013, before reaching a period high of 19.66% in 2014. This trend suggests that the growth in net earnings consistently outpaced the growth in the equity base, resulting in enhanced capital efficiency.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Return on Assets (ROA)
Allergan Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net earnings attributable to Allergan, Inc. | 1,524,200) | 985,100) | 1,098,800) | 934,500) | 600) | |
| Total assets | 12,415,700) | 10,574,300) | 9,179,300) | 8,508,600) | 8,308,100) | |
| Profitability Ratio | ||||||
| ROA1 | 12.28% | 9.32% | 11.97% | 10.98% | 0.01% | |
| 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: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
ROA = 100 × Net earnings attributable to Allergan, Inc. ÷ Total assets
= 100 × 1,524,200 ÷ 12,415,700 = 12.28%
2 Click competitor name to see calculations.
The financial performance between 2010 and 2014 is characterized by a significant initial recovery in profitability followed by a period of consistent asset expansion and fluctuating operational efficiency.
- Net Earnings Performance
- A substantial increase in net earnings occurred between 2010 and 2011, rising from US$ 600 thousand to US$ 934.5 million. Following this surge, earnings peaked in 2012 at US$ 1.09 billion, experienced a moderate decline to US$ 985.1 million in 2013, and subsequently reached a five-year high of US$ 1.52 billion in 2014.
- Total Asset Growth
- Total assets exhibited a steady upward trajectory throughout the analyzed period, increasing from US$ 8.31 billion in 2010 to US$ 12.42 billion by 2014. This growth reflects a continuous expansion of the company's resource base over the five-year span.
- Return on Assets (ROA) Dynamics
- The ROA shows a dramatic improvement from 0.01% in 2010 to 10.98% in 2011, indicating a rapid shift in the ability to generate profit from assets. A peak of 11.97% was reached in 2012, followed by a contraction to 9.32% in 2013, which coincided with a period where asset growth surpassed earnings growth. The trend concluded with a recovery to 12.28% in 2014, representing the highest level of asset productivity in the period.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?