Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Income Statement
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Analysis of Geographic Areas
- Price to FCFE (P/FCFE)
- Analysis of Debt
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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 data reveals several positive trends in profitability and returns over the five-year period ending December 31, 2014.
- Gross Profit Margin
- There is a consistent increase in the gross profit margin, rising from 82.16% in 2010 to 86.6% in 2014. This indicates that the company improved its cost control or pricing power, generating more profit from its revenue at the gross level each year.
- Operating Profit Margin
- The operating profit margin shows a significant improvement, expanding from a low 5.37% in 2010 to approximately 28% in the subsequent years, peaking at 29.19% in 2013 before a slight dip to 28.2% in 2014. This suggests enhanced efficiency in managing operating expenses or a shift to more profitable operations during this period.
- Net Profit Margin
- The net profit margin also improved markedly from almost negligible levels (0.01%) in 2010 to a range between 15.9% and 21.39% from 2011 onward, with the highest point in 2014 at 21.39%. The fluctuation around these years indicates some variability in non-operating items or tax impacts but overall shows a strong upward trend in bottom-line profitability.
- Return on Equity (ROE)
- Return on equity follows a similar pattern, starting near zero in 2010 and increasing to around 15-20% for the rest of the period. Although it dropped in 2013 to 15.24%, it rebounded to 19.66% in 2014. This implies shareholders experienced growing returns, reflecting improved net income relative to equity.
- Return on Assets (ROA)
- The return on assets also shows a significant increase, from 0.01% in 2010 to a high of 12.28% in 2014, with a dip to 9.32% in 2013 similar to ROE. This indicates enhanced asset utilization efficiency over time, despite some fluctuations.
Overall, the data illustrates a company that substantially improved its profitability margins and returns on equity and assets during the five years, with some minor variability in 2013. The trends suggest stronger operational performance, better cost management, and enhanced asset efficiency over the period analyzed.
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 | ||||||
| Product net sales | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| 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 × ÷ =
2 Click competitor name to see calculations.
- Gross Profit
- The gross profit has shown a consistent upward trend over the five-year period from 2010 to 2014. Starting at approximately 3.96 billion US dollars in 2010, it rose steadily each year, reaching about 6.17 billion US dollars by the end of 2014. This represents a significant increase, indicating enhanced operational efficiency or increased revenue generation capacity.
- Product Net Sales
- Product net sales have also exhibited continuous growth throughout the analyzed years. Beginning at roughly 4.82 billion US dollars in 2010, net sales increased annually, culminating at approximately 7.13 billion US dollars in 2014. The steady rise in sales figures suggests expanding market demand, successful product offerings, or effective sales strategies.
- Gross Profit Margin
- The gross profit margin percentage has improved consistently over the period. From 82.16% in 2010, it increased each year, reaching 86.60% in 2014. This positive trajectory indicates improved cost management or pricing strategies, allowing the company to retain a higher portion of revenue as gross profit.
- Overall Summary
- Across the five years, the company demonstrated robust growth in both top-line and profitability metrics. The simultaneous increase in gross profit margin and absolute gross profit reinforces the notion of enhanced operational performance and efficiency. The data reflect favorable business conditions, successful execution of sales efforts, and potentially improved cost structures.
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 | ||||||
| Product net sales | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| 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 Click competitor name to see calculations.
- Operating Income
- The operating income showed a substantial increase over the five-year period. Starting at approximately 258.6 million USD in 2010, it rose sharply to 1.3651 billion USD in 2011, representing a more than fivefold increase. The upward trend continued with operating income reaching 1.6133 billion USD in 2012, 1.8093 billion USD in 2013, and peaking at 2.0093 billion USD in 2014. The data indicates consistent growth in operating income each year after 2010, reflecting improved operational performance or business expansion.
- Product Net Sales
- Product net sales also exhibited a steady upward trajectory throughout the period. Sales increased from approximately 4.82 billion USD in 2010 to 5.35 billion USD in 2011, then continued to grow to 5.71 billion USD in 2012, 6.20 billion USD in 2013, and reached 7.13 billion USD in 2014. This consistent growth in net sales indicates successful market demand and potential expansion of sales volume or pricing power over these years.
- Operating Profit Margin
- The operating profit margin experienced a significant rise from 5.37% in 2010 to 25.53% in 2011. It continued to improve, reaching 28.26% in 2012 and peaking at 29.19% in 2013. In 2014, the margin slightly declined to 28.2% but remained stable and high compared to the starting point. This suggests enhanced efficiency in operations and better cost management contributing to profitability gains despite the rising sales volume.
- Overall Analysis
- The data collectively demonstrates strong financial performance with increasing revenue and profitability over the observed period. The substantial jump in operating income and profit margin from 2010 to 2011 suggests a major improvement in operational efficiency or a shift in business strategy leading to higher profitability. Continued growth in product net sales supports these profitability trends, indicating ongoing successful market penetration or product acceptance. The slight dip in operating profit margin in 2014 does not significantly detract from an overall positive trend of enhanced operational profitability.
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. | ||||||
| Product net sales | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| 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 × ÷ =
2 Click competitor name to see calculations.
- Net earnings attributable to Allergan, Inc.
- The net earnings showed a significant and consistent increase over the five-year period. Starting from a relatively low value of 600 thousand US dollars in 2010, there was a remarkable jump to 934,500 thousand US dollars in 2011. Subsequent years saw continued growth, reaching 1,098,800 thousand in 2012, a slight decrease to 985,100 thousand in 2013, followed by a substantial rise to 1,524,200 thousand in 2014. This pattern reflects strong overall profitability growth with a minor dip in 2013.
- Product net sales
- Product net sales exhibited a steady upward trend throughout the period under review. Starting at 4,819,600 thousand US dollars in 2010, sales increased annually without interruption, culminating in 7,126,100 thousand in 2014. This consistent growth implies successful market expansion or increased demand for products over time.
- Net profit margin
- The net profit margin experienced substantial improvement from 2010 to 2014. Initially almost negligible at 0.01% in 2010, it rose sharply to 17.48% in 2011 and continued to climb to 19.25% in 2012. There was a moderate decline in 2013 to 15.9%, followed by a recovery and peak at 21.39% in 2014. This indicates improved operational efficiency or cost management leading to higher profitability relative to sales, despite some volatility in the middle years.
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. | ||||||
| Total Allergan, Inc. stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| 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 × ÷ =
2 Click competitor name to see calculations.
- Net Earnings Attributable to Allergan, Inc.
- The net earnings exhibit a strong upward trend over the five-year period. Starting from a relatively low value of 600 thousand US dollars in 2010, earnings increased dramatically to 934,500 thousand by 2011. This positive trajectory continued, reaching 1,098,800 thousand in 2012, with a slight dip to 985,100 thousand in 2013, followed by a significant increase to 1,524,200 thousand in 2014. Overall, the growth suggests robust profitability improvements after 2010.
- Total Stockholders’ Equity
- The total stockholders’ equity steadily increased each year, indicating consistent growth in the company’s net assets. Equity rose from 4,757,700 thousand US dollars in 2010 to 5,309,600 thousand in 2011, and continued to climb annually to 5,837,100 thousand in 2012, 6,463,200 thousand in 2013, and ultimately 7,753,000 thousand in 2014. This upward trend reflects stable capital accumulation and retained earnings over the period.
- Return on Equity (ROE)
- The ROE metric experienced substantial improvement after 2010. The extremely low initial value of 0.01% in 2010 surged to 17.6% in 2011, demonstrating enhanced efficiency in generating profits from shareholders’ equity. This upward momentum continued with ROE reaching 18.82% in 2012. A slight decline to 15.24% was observed in 2013, yet it rebounded strongly to 19.66% in 2014, marking the highest return in the period. This pattern indicates effective management in utilizing equity to generate earnings despite a minor fluctuation in 2013.
- Overall Analysis
- The data over the analyzed timeframe shows significant improvements in profitability and equity growth. The consistent increase in net earnings after a very low base in 2010 signifies successful operational or market developments. Simultaneously, steady growth in stockholders' equity suggests solid financial foundations. The ROE improvements corroborate these findings, showing an enhanced ability to convert equity into profits. The slight dip in earnings and ROE in 2013 appears to be a temporary deviation within an otherwise positive trend. Taken together, the financial indicators point toward strong corporate performance and growing shareholder value during the period.
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. | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| 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 × ÷ =
2 Click competitor name to see calculations.
- Net Earnings Attributable to Allergan, Inc.
- Net earnings demonstrated significant growth over the five-year period. Starting from a modest 600 thousand US dollars in 2010, earnings increased markedly to 934.5 million in 2011. This rising trend continued with earnings reaching approximately 1.1 billion US dollars in 2012. A slight decline was observed in 2013, with net earnings falling to 985.1 million, followed by a strong recovery to 1.52 billion US dollars in 2014. Overall, net earnings showed substantial growth with some fluctuations, particularly in the middle years.
- Total Assets
- Total assets consistently increased throughout the period. Beginning at 8.31 billion US dollars at the end of 2010, assets rose gradually to 8.51 billion in 2011 and continued upward to 9.18 billion in 2012. The growth accelerated in subsequent years, reaching 10.57 billion in 2013 and 12.42 billion US dollars in 2014. This steady rise indicates ongoing asset accumulation and possible expansion activities.
- Return on Assets (ROA)
- ROA exhibited a notable improvement from a negligible level of 0.01% in 2010 to double-digit returns in later years. It rose sharply to 10.98% in 2011 and increased further to 11.97% in 2012. A decline in ROA occurred in 2013, dropping to 9.32%, which aligns with the dip in net earnings for that year. However, ROA rebounded to 12.28% in 2014, the highest level recorded in the timeframe, indicating enhanced efficiency in generating profit from assets.