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
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Return on Assets (ROA) since 2005
- Analysis of Debt
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Profitability Ratios (Summary)
Edwards Lifesciences Corp., profitability ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Gross profit margin
- The gross profit margin exhibited a stable upward trend over the five-year period, increasing from 74.52% in 2017 to 76.13% in 2021. This indicates a consistent ability to control production costs relative to revenue, contributing positively to overall profitability.
- Operating profit margin
- Operating profit margin experienced fluctuations throughout the timeframe. It started at 31.89% in 2017, decreased significantly to 20.1% in 2018, then partially recovered to 26.38% in 2019. It dipped again to 20.46% in 2020, before achieving a notable increase to 32.3% in 2021. These variations suggest periods of operational efficiency challenges followed by strong improvement in the most recent year.
- Net profit margin
- The net profit margin showed an overall upward trajectory, rising from 16.99% in 2017 to 28.73% in 2021. The margin increased steadily with minor regression in 2020, reflecting effective management of expenses and non-operating factors, resulting in enhanced bottom-line profitability by 2021.
- Return on equity (ROE)
- ROE followed a generally positive trend beginning at 19.74% in 2017, peaking at 25.24% in 2019, declining to 18% in 2020, and then recovering to 25.76% in 2021. This indicates fluctuations in how effectively shareholders' equity was utilized to generate earnings, with a strong rebound in the last year.
- Return on assets (ROA)
- ROA showed growth from 10.25% in 2017 to 17.68% in 2021, despite a decline in 2020. The overall increase demonstrates improved efficiency in using company assets to generate profits, with 2021 marking the highest utilization in the period analyzed.
Return on Sales
Return on Investment
Gross Profit Margin
Edwards Lifesciences Corp., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Gross Profit
- The gross profit demonstrates a consistent upward trend over the five-year period. Starting at approximately $2.56 billion in 2017, it increased each year, reaching about $3.98 billion in 2021. This suggests strong growth in the company's core profitability before accounting for operating expenses.
- Net Sales
- Net sales have also shown a steady increase, rising from roughly $3.44 billion in 2017 to around $5.23 billion in 2021. The year-over-year growth in net sales complements the rising gross profit figures, indicating expanding sales volumes or improved pricing strategies.
- Gross Profit Margin
- The gross profit margin has remained relatively stable but shows a slight upward trend over the period. Beginning at 74.52% in 2017, the margin fluctuated slightly in the following years but ultimately increased to 76.13% by 2021. This improvement indicates increased efficiency in production or favorable cost management relative to sales revenue.
Operating Profit Margin
Edwards Lifesciences Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Operating income | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| 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: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Sales
- Net sales exhibited a general upward trend over the five-year period. Starting at 3.44 billion US dollars in 2017, sales increased steadily each year, reaching 5.23 billion US dollars in 2021. This represents a significant overall growth in revenue, with particularly notable increases in the last two years.
- Operating Income
- Operating income displayed considerable volatility throughout the years. The figure declined sharply from 1.10 billion US dollars in 2017 to 748.2 million in 2018. It then rebounded to 1.15 billion in 2019 but subsequently fell to 897.6 million in 2020. A strong recovery occurred in 2021, with operating income peaking at 1.69 billion US dollars, which is the highest in the period analyzed.
- Operating Profit Margin
- The operating profit margin fluctuated substantially during the period. The margin started relatively high at 31.89% in 2017, dropped significantly to 20.1% in 2018, and improved to 26.38% in 2019. It again declined to 20.46% in 2020 before increasing sharply to 32.3% in 2021. This pattern indicates variability in operational efficiency and cost control, with notable improvement in the most recent year.
- Overall Insights
- The data reflect a company experiencing growth in net sales but facing challenges in maintaining consistent operating income and profit margins. The volatility in operating income and margin suggests fluctuations in operational costs or other factors affecting profitability. The recovery and highest values in 2021 suggest successful measures to enhance profitability and efficiency, aligning with the peak in net sales during the same year.
Net Profit Margin
Edwards Lifesciences Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| 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: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net profit margin = 100 × Net income ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Trend
- The net income exhibits a generally upward trajectory over the five-year period. Starting at 583,600 thousand dollars in 2017, it increases to 722,200 thousand dollars in 2018. The growth continues more sharply in 2019, reaching 1,046,900 thousand dollars, followed by a decline in 2020 to 823,400 thousand dollars. In 2021, net income recovers and peaks at 1,503,100 thousand dollars, representing the highest value in the reported period.
- Net Sales Trend
- Net sales show consistent growth throughout the observed years. Beginning at 3,435,300 thousand dollars in 2017, sales increase moderately each year, reaching 3,722,800 thousand in 2018, 4,348,000 thousand in 2019, and slightly higher at 4,386,300 thousand in 2020. In 2021, net sales see a notable increase, jumping to 5,232,500 thousand dollars, marking the largest sales volume in the timeframe.
- Net Profit Margin Analysis
- The net profit margin percentage indicates fluctuating profitability efficiency. The margin starts at 16.99% in 2017 and rises to 19.4% in 2018, followed by a further increase to 24.08% in 2019. A decline occurs in 2020, dropping the margin to 18.77%. However, the margin rebounds significantly in 2021, achieving the highest rate of 28.73%, suggesting improved operational efficiency or cost management in that year.
- Overall Insights
- The data reflects a company with growing revenue and fluctuating but generally increasing profitability over the five years. The dip in net income and profit margin in 2020, despite relatively stable sales, may indicate external challenges or increased costs during that year. The strong recovery in 2021 across net income, sales, and profit margin implies a return to robust performance and enhanced financial health. The increasing net profit margin suggests better cost control or pricing power in recent years.
Return on Equity (ROE)
Edwards Lifesciences Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | ||||||
| Stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| 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: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- Net income demonstrates a generally upward trend over the five-year period. It increased from 583,600 thousand US dollars in 2017 to a peak of 1,046,900 thousand US dollars in 2019. There was a notable decline in 2020 to 823,400 thousand US dollars, followed by a substantial recovery and growth to 1,503,100 thousand US dollars in 2021, the highest value observed in the period.
- Stockholders’ Equity
- Stockholders’ equity shows consistent growth during the period analyzed. It rose from 2,956,200 thousand US dollars in 2017 to 5,835,900 thousand US dollars in 2021. This steady increase indicates an expansion in the company's retained earnings and/or capital contributions, reflecting improved financial strength and capacity over time.
- Return on Equity (ROE)
- ROE fluctuates within the range of 18% to 25.76%. It increased from 19.74% in 2017 to a high of 25.24% in 2019, followed by a decrease to 18% in 2020. ROE then surged again to 25.76% in 2021. These fluctuations suggest variability in the efficiency of the company in generating profits from its equity base, with a particularly strong performance in 2019 and 2021.
- Summary of Trends
- Overall, the company appears to be improving its profitability and financial base, as evidenced by rising net income and stockholders' equity. Despite a dip in net income and ROE in 2020, the recovery in 2021 is strong. The consistent growth in stockholders' equity alongside fluctuating but generally high ROE values reflects both expansion and varying efficiency in utilizing equity to generate profits throughout the period.
Return on Assets (ROA)
Edwards Lifesciences Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| 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: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- Net income exhibited a general upward trend over the five-year period. Starting at 583.6 million US dollars in 2017, it increased to 722.2 million in 2018, followed by a more significant rise to 1.0469 billion in 2019. There was a decline in 2020, with net income falling to 823.4 million, before sharply increasing to 1.5031 billion in 2021. This pattern indicates strong overall profitability growth, with a temporary dip in 2020.
- Total Assets
- Total assets showed a fluctuating but mostly positive trend. Beginning at 5.6958 billion US dollars in 2017, assets decreased to 5.3237 billion in 2018. Subsequently, a steady increase occurred from 2019 through 2021, with total assets reaching 8.5026 billion by the end of 2021. This suggests ongoing asset expansion and possibly investment or acquisition activity after the initial decline in 2018.
- Return on Assets (ROA)
- The ROA percentage followed a variable path corresponding to net income and asset trends. It started at 10.25% in 2017, rose significantly to 13.57% in 2018 and further to 16.14% in 2019. A decline to 11.38% was observed in 2020, aligning with the drop in net income. However, ROA rebounded to 17.68% in 2021, the highest point in the series. The fluctuation reflects changes in operational efficiency and profitability relative to asset base over time.
- Overall Analysis
- The data reflects growth in profitability and asset base over the period, notwithstanding some volatility in 2018 and 2020. The increase in net income and ROA by 2021 highlights improved returns and financial performance, while asset growth supports the company's capacity for future revenue generation. The temporary drops in net income and ROA suggest external or operational challenges in 2020, which were effectively managed going into 2021.