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: Liabilities and Stockholders’ Equity
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2005
- Analysis of Debt
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Profitability Ratios (Summary)
CVS Health Corp., profitability ratios
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Gross Profit Margin
- The gross profit margin has exhibited a consistent downward trend over the five-year period. Beginning at 18.01% in 2020, the margin decreased steadily each year, falling to 13.29% by 2024. This decline suggests increasing cost pressures or diminishing pricing power impacting the core profitability of the company’s sales.
- Operating Profit Margin
- The operating profit margin also shows a declining trend overall but with notable fluctuations. Starting at 5.19% in 2020, it dropped to 2.41% in 2022, experienced a recovery to 3.85% in 2023, and then declined again to 2.3% in 2024. These movements indicate varying operational efficiencies or cost management challenges within the period, with no clear sustained improvement.
- Net Profit Margin
- Net profit margin trends align somewhat with operating margins, starting at 2.68% in 2020, peaking slightly at 2.72% in 2021, before falling sharply to 1.29% in 2022. A partial recovery to 2.34% occurred in 2023, followed by a decline to 1.24% in 2024. The volatility in net margin suggests fluctuations in overall profitability after accounting for all expenses, taxes, and non-operating items.
- Return on Equity (ROE)
- ROE values demonstrate considerable variability. After a modest increase from 10.35% in 2020 to 10.54% in 2021, there is a marked decline to 5.84% in 2022. ROE rebounded strongly to 10.91% in 2023 but then decreased to 6.11% in 2024. This pattern implies inconsistent effectiveness in generating shareholder returns relative to equity invested during these years.
- Return on Assets (ROA)
- ROA follows a similar pattern to ROE but at lower levels, moving from 3.11% in 2020 to a peak of 3.39% in 2021, then dropping to 1.82% in 2022. It rose again to 3.34% in 2023 before dropping back to 1.82% in 2024. The fluctuations indicate variability in asset utilization efficiency and overall profitability derived from company assets.
Return on Sales
Return on Investment
Gross Profit Margin
CVS Health Corp., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Revenues from customers | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenues from customers
= 100 × ÷ =
2 Click competitor name to see calculations.
- Revenues from customers
- The revenues demonstrated a consistent upward trend over the years, increasing from approximately 267.9 billion USD in 2020 to about 370.7 billion USD in 2024. This growth reflects a steady expansion in the company's sales volume or pricing power, with the most significant increase observed between 2022 and 2023.
- Gross profit
- Gross profit initially increased from about 48.2 billion USD in 2020 to a peak around 53.5 billion USD in 2022, followed by a slight decline to approximately 49.2 billion USD in 2024. Despite the overall growing revenue, gross profit began to show signs of contraction after 2022, indicating potential pressures on cost management or pricing dynamics.
- Gross profit margin
- The gross profit margin consistently declined over the analyzed period, dropping from 18.01% in 2020 to 13.29% in 2024. This trend suggests increasing cost of goods sold relative to revenues or other factors eroding profitability at the gross level. The steady margin contraction indicates that despite rising revenues, the company faces diminishing efficiency or margin compression in its core operations.
Operating Profit Margin
CVS Health Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | ||||||
| Revenues from customers | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Operating Profit Margin, Sector | ||||||
| Health Care Equipment & Services | ||||||
| Operating Profit Margin, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Operating profit margin = 100 × Operating income ÷ Revenues from customers
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Income
- The operating income demonstrated fluctuations over the analyzed periods. It initially decreased from 13,911 million USD in 2020 to 13,193 million USD in 2021, followed by a more substantial drop to 7,746 million USD in 2022. Thereafter, it increased significantly to 13,743 million USD in 2023 but declined again to 8,516 million USD in 2024. This pattern indicates volatility in operating profitability.
- Revenues from Customers
- Revenues showed a consistent upward trend throughout the period. Starting at 267,908 million USD in 2020, revenues increased steadily each year to reach 370,656 million USD in 2024. This continuous growth indicates strong revenue expansion despite variations in operating income.
- Operating Profit Margin
- The operating profit margin exhibited a declining trend overall. From 5.19% in 2020, it decreased to 4.54% in 2021 and further dropped sharply to 2.41% in 2022. Although it somewhat recovered to 3.85% in 2023, it again declined to 2.3% in 2024. The declining margin amidst growing revenues suggests increased operational costs or pricing pressure affecting profitability.
Net Profit Margin
CVS Health Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to CVS Health | ||||||
| Revenues from customers | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Net Profit Margin, Sector | ||||||
| Health Care Equipment & Services | ||||||
| Net Profit Margin, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Net profit margin = 100 × Net income attributable to CVS Health ÷ Revenues from customers
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Attributable to CVS Health
- The net income exhibits notable fluctuations over the five-year period. It increased from 7,179 million USD in 2020 to 7,910 million USD in 2021, indicating a positive growth trajectory initially. However, there was a significant decline in 2022, with net income dropping to 4,149 million USD. This was followed by a recovery in 2023, rising sharply to 8,344 million USD, which represents the highest value in the period. In 2024, net income again declined, falling to 4,614 million USD. Overall, this pattern reveals volatility in profitability, with peaks in 2021 and 2023 and substantial decreases in the years 2022 and 2024.
- Revenues from Customers
- Revenues consistently increased each year, demonstrating steady growth in the company's top-line performance. Starting at 267,908 million USD in 2020, revenues rose annually, reaching 370,656 million USD by 2024. This progression suggests effective sales growth or expansion in customer base or product offerings over the period, with an overall increase of approximately 38% from 2020 to 2024.
- Net Profit Margin
- The net profit margin shows variability with a generally downward trend, despite some intermittent recoveries. The margin was 2.68% in 2020, slightly increasing to 2.72% in 2021. It then dropped substantially to 1.29% in 2022, improved to 2.34% in 2023, and declined again to 1.24% in 2024. These fluctuations indicate that despite increasing revenues, profitability efficiency experienced challenges, particularly in 2022 and 2024, which may be linked to the net income volatility observed during these years.
Return on Equity (ROE)
CVS Health Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to CVS Health | ||||||
| Total CVS Health shareholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| ROE, Sector | ||||||
| Health Care Equipment & Services | ||||||
| ROE, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
ROE = 100 × Net income attributable to CVS Health ÷ Total CVS Health shareholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Attributable to CVS Health
- The net income exhibits notable fluctuations over the five-year period. Starting at $7,179 million in 2020, it rose to $7,910 million in 2021, reflecting an improvement in profitability. However, in 2022, net income sharply declined to $4,149 million, indicating a significant reduction in earnings. The following year, 2023, saw a strong recovery, with net income increasing to $8,344 million, the highest point in the period. In 2024, net income decreased again to $4,614 million, suggesting volatility in the company's earnings performance over time.
- Total CVS Health Shareholders’ Equity
- The shareholders’ equity experienced moderate growth with some fluctuations. The value increased from $69,389 million in 2020 to $75,075 million in 2021. In 2022, equity slightly declined to $71,015 million before rising again to $76,461 million in 2023. By 2024, there was a small decrease to $75,560 million. Overall, the shareholders’ equity shows a relatively stable trend with incremental growth over the five years, indicating sustained capital retention despite earnings volatility.
- Return on Equity (ROE)
- The ROE followed a pattern largely consistent with the fluctuations in net income. It began at 10.35% in 2020 and slightly increased to 10.54% in 2021. In 2022, ROE declined markedly to 5.84%, reflecting diminished profitability relative to equity. The metric then rebounded to 10.91% in 2023, corresponding with the peak in net income. However, in 2024, ROE dropped again to 6.11%. This volatility highlights varying efficiency in generating profit from shareholders’ equity across the years.
- Summary of Financial Trends
- The company’s financial data over the examined period reveals significant fluctuations in profitability, as evidenced by the alternating peaks and troughs in net income and ROE. Despite this variability in earnings, shareholders’ equity maintained a relatively stable and slightly upward trajectory. The alternating pattern in profitability metrics, combined with relatively steady equity levels, suggests that while earnings can be volatile, the company’s capital base has remained resilient. This may point to successful management of equity resources even during periods of lower net income.
Return on Assets (ROA)
CVS Health Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to CVS Health | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| ROA, Sector | ||||||
| Health Care Equipment & Services | ||||||
| ROA, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
ROA = 100 × Net income attributable to CVS Health ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income attributable to CVS Health
- The net income demonstrates a fluctuating trend over the five-year period. It increased from 7,179 million USD in 2020 to a peak of 8,344 million USD in 2023. However, the value declined notably in the years 2022 and 2024, reaching 4,149 million USD and 4,614 million USD respectively. This indicates variability in profitability with significant dips occurring every alternate year.
- Total Assets
- Total assets showed relative stability with slight fluctuations. The asset base was 230,715 million USD in 2020 and slightly increased to 253,215 million USD in 2024, indicating moderate asset growth over the period. Noteworthy is a dip in 2022 to 228,275 million USD followed by a recovery in subsequent years, reflecting some asset reallocation or disposals during that period.
- Return on Assets (ROA)
- The ROA follows a pattern consistent with net income changes, demonstrating sensitivity to profitability shifts. It started at 3.11% in 2020, increased to 3.39% in 2021, then declined sharply to 1.82% in 2022. It rebounded to 3.34% in 2023 before again dropping to 1.82% in 2024. This pattern suggests that asset utilization efficiency varies significantly over the period, closely linked to earnings fluctuations.