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: Assets
- Common-Size Balance Sheet: Assets
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Total Asset Turnover since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Sales (P/S) since 2005
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Profitability Ratios (Summary)
Caterpillar Inc., 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 demonstrated a consistent upward trend over the five-year period. Starting at 25.47% in 2020, it gradually increased to 34.49% by 2024. Notably, the most significant rise occurred between 2022 and 2023, where the margin grew from 26.91% to 33.04%, indicating improved efficiency in production or cost management.
- Operating Profit Margin
- Operating profit margin also showed a positive trajectory. From 11.67% in 2020, it rose steadily to 21.3% in 2024. There was a slight dip between 2021 and 2022, from 14.27% to 13.97%, but subsequent years displayed strong recovery and improvement, with the margin reaching over 20% from 2023 onward, reflecting enhanced operational profitability.
- Net Profit Margin
- The net profit margin exhibited variability but overall growth, beginning at 7.68% in 2020 and increasing to 17.59% by 2024. The margin peaked notably in 2021 at 13.47%, then declined slightly in 2022 to 11.85%, before increasing steadily thereafter. This suggests fluctuations in net income relative to sales but an encouraging improvement in overall profitability by the end of the period.
- Return on Equity (ROE)
- Return on equity showed a robust increasing pattern, highlighting significant enhancement in the company’s ability to generate profit from shareholders' equity. Starting at 19.56% in 2020, it more than doubled by 2021 to 39.37%, and continued to rise annually to reach 55.37% in 2024. This rapid increase suggests effective management of equity and profitable growth over the years.
- Return on Assets (ROA)
- Return on assets improved steadily, moving from a low of 3.83% in 2020 to 12.3% in 2024. The growth indicates better utilization of assets to generate earnings, with a marked acceleration in improvement after 2021, reflecting increased operational efficiency and asset management.
Return on Sales
Return on Investment
Gross Profit Margin
Caterpillar Inc., 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 margin | ||||||
| Sales of Machinery, Energy & Transportation | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Boeing Co. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
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 margin ÷ Sales of Machinery, Energy & Transportation
= 100 × ÷ =
2 Click competitor name to see calculations.
- Gross Margin
- The gross margin shows a consistent upward trend from 2020 through 2024. Starting at 9,940 million US dollars in 2020, it increased steadily each year, reaching 21,164 million US dollars by 2024. The most notable rise occurred between 2022 and 2023, where there was an increase of approximately 5,878 million US dollars, reflecting significant improvement in the gross earnings from core operations.
- Sales of Machinery, Energy & Transportation
- Sales revenue in the Machinery, Energy, and Transportation segments generally increased over the period from 2020 to 2023. The figures rose from 39,022 million US dollars in 2020 to a peak of 63,869 million US dollars in 2023. However, there was a slight decline in 2024, with sales decreasing to 61,363 million US dollars. This reduction could warrant further investigation into market conditions or operational factors affecting sales in the final year.
- Gross Profit Margin (%)
- The gross profit margin percentage experienced continuous improvement throughout the five-year span. Beginning at 25.47% in 2020, it gradually rose each year, reaching 34.49% in 2024. This increase indicates enhanced profitability relative to sales, suggesting better cost management or more favorable sales mix contributing to higher margins.
- Overall Analysis
- Overall, the data reflects strong growth in both gross margin and gross profit margin, signifying increasing efficiency and profitability over time. While sales generally increased, peaking in 2023, the slight contraction in 2024 suggests potential challenges that may need to be addressed to sustain growth. The improvement in profit margins alongside rising gross margins points to effective cost control and possibly a shift towards higher-margin products or services within the company's portfolio.
Operating Profit Margin
Caterpillar Inc., 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 profit | ||||||
| Sales of Machinery, Energy & Transportation | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Boeing Co. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Operating Profit Margin, Sector | ||||||
| Capital Goods | ||||||
| Operating Profit Margin, Industry | ||||||
| Industrials | ||||||
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 profit ÷ Sales of Machinery, Energy & Transportation
= 100 × ÷ =
2 Click competitor name to see calculations.
An analysis of the financial data reveals a consistent upward trend in operating profit over the given periods, increasing from US$ 4,553 million at the end of 2020 to US$ 13,072 million by the end of 2024. This demonstrates significant growth in profitability with a particularly strong jump between 2022 and 2023.
Sales of Machinery, Energy & Transportation also show a general growth trend from US$ 39,022 million in 2020, peaking at US$ 63,869 million in 2023. However, a slight decline is observed in 2024 where sales drop to US$ 61,363 million, indicating a potential market or demand contraction after several years of growth.
The operating profit margin, expressed as a percentage, follows an increasing trajectory from 11.67% in 2020 to 21.3% in 2024. This suggests improving efficiency or cost management, as the company is generating a higher proportion of profit relative to its revenue. Notably, the margin shows a marked rise during 2023 and 2024, aligning with the period where operating profit grew substantially despite the slight reduction in sales in the final year.
- Operating Profit
- Consistent growth over five years, with the most significant increase between 2022 and 2023.
- Sales of Machinery, Energy & Transportation
- Increasing trend from 2020 through 2023, followed by a modest decline in 2024.
- Operating Profit Margin
- Steady improvement throughout the period, peaking in 2024, indicating enhanced profitability and operational efficiency despite a slight dip in sales.
Overall, the data indicates that while sales volume experienced a minor setback in the last measured year, the company’s profitability and operational efficiency continued to improve. The ability to maintain and even increase the operating profit margin during a period of slightly reduced sales suggests effective cost controls, pricing strategies, or favorable changes in product mix or market conditions.
Net Profit Margin
Caterpillar Inc., 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) | ||||||
| Profit attributable to common stockholders | ||||||
| Sales of Machinery, Energy & Transportation | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Boeing Co. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Net Profit Margin, Sector | ||||||
| Capital Goods | ||||||
| Net Profit Margin, Industry | ||||||
| Industrials | ||||||
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 × Profit attributable to common stockholders ÷ Sales of Machinery, Energy & Transportation
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data indicates a positive trajectory in the overall profitability and sales performance over the five-year period ending December 31, 2024.
- Profit attributable to common stockholders
- This metric shows a consistent upward trend, rising from $2,998 million in 2020 to $10,792 million in 2024. The increase is especially notable between 2021 and 2023, with profits more than doubling within this period. This growth suggests improved earnings capacity and effective management of expenses relative to revenues.
- Sales of Machinery, Energy & Transportation
- Sales have generally increased, demonstrating growth in the core revenue-generating segments. From $39,022 million in 2020, sales peaked at $63,869 million in 2023 before slightly declining to $61,363 million in 2024. This minor decrease in the final year contrasts with the overall upward sales trend seen over the five years.
- Net profit margin
- The net profit margin improved steadily, starting at 7.68% in 2020 and reaching 17.59% by 2024. The margin experienced some fluctuations, with a slight dip in 2022 but a strong rebound in subsequent years. This increasing margin indicates enhanced operational efficiency or favorable cost structures, allowing the company to retain a larger portion of revenue as profit.
In summary, the data reflects robust growth in profitability and stable revenue expansion, accompanied by improved profit margins. The slight reduction in sales in 2024 merits attention, though it does not appear to have significantly impacted the profit levels or margins. Overall, the financial performance depicts a strengthening position over the observed timeframe.
Return on Equity (ROE)
Caterpillar Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Profit attributable to common stockholders | ||||||
| Equity attributable to common shareholders | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Boeing Co. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| ROE, Sector | ||||||
| Capital Goods | ||||||
| ROE, Industry | ||||||
| Industrials | ||||||
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 × Profit attributable to common stockholders ÷ Equity attributable to common shareholders
= 100 × ÷ =
2 Click competitor name to see calculations.
- Profit attributable to common stockholders
- The profit shows a consistent and significant upward trend across the periods. Starting at $2,998 million in 2020, it more than doubled by 2021 to $6,489 million. The growth continued steadily through 2022, reaching $6,705 million, and then accelerated notably in 2023 and 2024, culminating at $10,792 million. The data indicates strong profitability improvement over the five-year span.
- Equity attributable to common shareholders
- Equity experienced moderate growth between 2020 and 2021, increasing from $15,331 million to $16,484 million. However, in 2022, there was a slight decline to $15,869 million. Following this dip, equity rebounded substantially in 2023 and stabilized in 2024 around $19,494 million and $19,491 million respectively. This pattern suggests some fluctuations in equity but an overall upward movement in the latter years.
- Return on Equity (ROE)
- ROE shows a strong positive trajectory, rising from 19.56% in 2020 to 39.37% in 2021, nearly doubling within a year. It continued to increase, reaching 42.25% in 2022. The rise became even more pronounced in 2023, hitting 53.02%, and peaked at 55.37% in 2024. This indicates enhanced efficiency in generating profit from equity, reflecting improved company performance and profitability.
Overall, the data reveals a company improving its profitability significantly while steadily managing equity. The robust increase in ROE further confirms a strengthening return on shareholders' investment over the analyzed period.
Return on Assets (ROA)
Caterpillar Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Profit attributable to common stockholders | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Boeing Co. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| ROA, Sector | ||||||
| Capital Goods | ||||||
| ROA, Industry | ||||||
| Industrials | ||||||
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 × Profit attributable to common stockholders ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data exhibits significant developments over the consecutive years from 2020 through 2024. Notably, profitability, as measured by profit attributable to common stockholders, has shown a pronounced upward trajectory. Starting at 2,998 million USD in 2020, profits more than doubled by 2021 to 6,489 million USD, continued to increase modestly in 2022 to 6,705 million USD, and surged further in 2023 and 2024 to 10,335 million USD and 10,792 million USD respectively. This reflects a strong growth pattern in net income generation.
Total assets have demonstrated a generally stable to modestly increasing pattern. From 78,324 million USD in 2020, assets rose moderately to 82,793 million USD in 2021. In 2022, there was a slight reduction to 81,943 million USD, followed by an increase to 87,476 million USD in 2023. The figure essentially plateaued in 2024 at 87,764 million USD. This relative stabilization suggests effective asset management with measured growth in asset base aligned with the profit improvements.
The Return on Assets (ROA) indicator reflects improving efficiency in asset utilization and profitability generation. ROA doubled from 3.83% in 2020 to 7.84% in 2021 and then increased marginally to 8.18% in 2022. More pronounced increases occurred in the following years with ROA rising to 11.81% in 2023 and further to 12.3% in 2024. This upward trend signals enhanced operational performance and profitability relative to the asset base.
- Profit attributable to common stockholders
- Strong growth observed, more than tripling from 2020 to 2024, with notable accelerations in 2023 and 2024.
- Total assets
- Modest fluctuations observed, with an overall slight increase of approximately 12% from 2020 to 2024, indicating steady asset management.
- Return on Assets (ROA)
- Consistent and significant improvement, reaching more than three times the initial level by 2024, indicating better asset utilization and profitability.
In summary, the company has demonstrated sustained profit growth, stable asset base expansion, and marked enhancement in returns on assets over the five-year period. These trends collectively indicate improved financial health and operational efficiency.