Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Generac Holdings Inc., 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 demonstrated a generally positive trend from 2017 to 2020, increasing steadily from 34.81% to a peak of 38.53% in 2020. However, this margin saw a decline in 2021 to 36.39%, indicating a reduction in cost efficiency or pricing power compared to the previous year.
- Operating Profit Margin
- The operating profit margin exhibited an overall upward trend over the five-year period. Starting at 15.01% in 2017, it increased notably in 2018 to 17.65%, followed by a slight dip in 2019 to 16.88%. However, by 2020 and 2021, the margin improved further to around 19.3%, indicating enhanced operational efficiency and control over operating expenses.
- Net Profit Margin
- The net profit margin showed consistent improvement throughout the period, rising from 9.53% in 2017 to 14.73% in 2021. This indicates a strengthening in overall profitability after accounting for all expenses, taxes, and costs, with a particularly sharp increase observed between 2019 and 2020.
- Return on Equity (ROE)
- Return on equity peaked in 2018 at 31.33%, reflecting high profitability relative to shareholders’ equity. Following this peak, ROE declined to a low of 24.41% in 2019 and remained relatively stable around 25% through 2020 and 2021. This decline and stabilization may suggest changes in equity structure or profitability dynamics impacting shareholder returns.
- Return on Assets (ROA)
- Return on assets shows a consistent upward trend over the period, reflecting improved efficiency in asset utilization. The value increased from 7.89% in 2017 to 11.29% in 2021, indicating that the company has become more effective in generating profit from its asset base.
Return on Sales
Return on Investment
Gross Profit Margin
Generac Holdings Inc., 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 | 1,360,082) | 957,654) | 797,752) | 725,040) | 582,117) | |
| Net sales | 3,737,184) | 2,485,200) | 2,204,336) | 2,023,464) | 1,672,445) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 36.39% | 38.53% | 36.19% | 35.83% | 34.81% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Boeing Co. | 4.84% | -9.78% | — | — | — | |
| Caterpillar Inc. | 26.30% | 25.47% | — | — | — | |
| Eaton Corp. plc | 32.28% | 30.52% | — | — | — | |
| GE Aerospace | 24.19% | 17.26% | — | — | — | |
| Honeywell International Inc. | 35.85% | 32.07% | — | — | — | |
| Lockheed Martin Corp. | 13.52% | 13.23% | — | — | — | |
| RTX Corp. | 19.40% | 15.08% | — | — | — | |
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 × 1,360,082 ÷ 3,737,184 = 36.39%
2 Click competitor name to see calculations.
The data indicates a consistent increase in both net sales and gross profit over the five-year period from 2017 to 2021. Net sales grew substantially from approximately 1.67 billion US dollars in 2017 to about 3.74 billion US dollars in 2021, reflecting a strong upward trend in revenue generation.
Gross profit also showed a significant upward trajectory, rising from around 582 million US dollars in 2017 to approximately 1.36 billion US dollars in 2021. This growth in gross profit accompanied the increase in net sales, indicating that the company was able to expand its earnings before deducting operating expenses commensurately with its revenue growth.
The gross profit margin exhibited some fluctuations but generally remained stable, with values ranging from 34.81% in 2017 to a peak of 38.53% in 2020, followed by a slight decrease to 36.39% in 2021. This trend suggests that the company managed to improve its cost efficiency relative to sales until 2020, before experiencing a modest decline in margin in the subsequent year.
- Net Sales
- Demonstrated a strong upward trend, more than doubling over five years.
- Gross Profit
- Increased consistently, indicating effective management of direct costs alongside revenue growth.
- Gross Profit Margin
- Improved from 2017 to 2020, implying enhanced profitability per dollar of sales, but slightly declined in 2021, which may warrant further investigation.
Operating Profit Margin
Generac Holdings Inc., 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) | ||||||
| Income from operations | 721,136) | 479,106) | 372,163) | 357,181) | 251,064) | |
| Net sales | 3,737,184) | 2,485,200) | 2,204,336) | 2,023,464) | 1,672,445) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 19.30% | 19.28% | 16.88% | 17.65% | 15.01% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Boeing Co. | -4.66% | -21.95% | — | — | — | |
| Caterpillar Inc. | 14.27% | 11.67% | — | — | — | |
| Eaton Corp. plc | 15.69% | 11.45% | — | — | — | |
| GE Aerospace | 8.58% | 5.49% | — | — | — | |
| Honeywell International Inc. | 18.03% | 17.45% | — | — | — | |
| Lockheed Martin Corp. | 13.61% | 13.22% | — | — | — | |
| RTX Corp. | 7.70% | -3.34% | — | — | — | |
| Operating Profit Margin, Sector | ||||||
| Capital Goods | 9.11% | 3.00% | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Industrials | 9.24% | 3.13% | — | — | — | |
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 × Income from operations ÷ Net sales
= 100 × 721,136 ÷ 3,737,184 = 19.30%
2 Click competitor name to see calculations.
The financial data reveals notable trends in key performance indicators over the five-year period ending December 31, 2021.
- Income from Operations
- Income from operations showed consistent growth, increasing from approximately $251 million in 2017 to $721 million in 2021. This represents nearly a threefold increase over the period, indicating significant expansion in operational profitability.
- Net Sales
- Net sales also demonstrated a strong upward trajectory, rising from around $1.67 billion in 2017 to approximately $3.74 billion in 2021. This growth trend highlights an expanding top line, with sales more than doubling, reflecting successful revenue-generation activities.
- Operating Profit Margin
- The operating profit margin exhibited a positive trend overall, starting at 15.01% in 2017 and reaching 19.3% in 2021. Although there was a slight dip from 17.65% in 2018 to 16.88% in 2019, the margin improved notably thereafter, peaking in 2020 and remaining steady into 2021. This suggests improved operational efficiency and better cost management as revenue increased.
Overall, the data indicates robust growth in both sales and income from operations, alongside enhanced profitability margins. The steady increase in operational profit margin coupled with rising sales implies the company managed to scale effectively while maintaining or improving cost controls.
Net Profit Margin
Generac Holdings Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Generac Holdings Inc. | 550,494) | 350,576) | 252,007) | 238,257) | 159,386) | |
| Net sales | 3,737,184) | 2,485,200) | 2,204,336) | 2,023,464) | 1,672,445) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 14.73% | 14.11% | 11.43% | 11.77% | 9.53% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Boeing Co. | -6.75% | -20.42% | — | — | — | |
| Caterpillar Inc. | 13.47% | 7.68% | — | — | — | |
| Eaton Corp. plc | 10.92% | 7.90% | — | — | — | |
| GE Aerospace | -9.17% | 7.81% | — | — | — | |
| Honeywell International Inc. | 16.11% | 14.64% | — | — | — | |
| Lockheed Martin Corp. | 9.42% | 10.45% | — | — | — | |
| RTX Corp. | 6.00% | -6.22% | — | — | — | |
| Net Profit Margin, Sector | ||||||
| Capital Goods | 3.71% | 1.85% | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Industrials | 5.85% | 0.09% | — | — | — | |
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 attributable to Generac Holdings Inc. ÷ Net sales
= 100 × 550,494 ÷ 3,737,184 = 14.73%
2 Click competitor name to see calculations.
- Net Income Attributable to Generac Holdings Inc.
- The net income shows a consistent upward trend over the five-year period. Starting at $159.4 million in 2017, it increased steadily each year, reaching $550.5 million in 2021. This represents a significant growth of more than threefold, indicating strong profitability improvements and effective operational performance.
- Net Sales
- Net sales also experienced continuous growth throughout the analyzed period. Sales increased from approximately $1.67 billion in 2017 to $3.74 billion in 2021. This near doubling in revenue suggests successful market expansion, increased product demand, or pricing strategies that positively impacted top-line growth.
- Net Profit Margin
- The net profit margin improved steadily from 9.53% in 2017 to 14.73% in 2021. This upward trend in profitability ratios indicates enhanced efficiency in cost management and possibly improved product mix or pricing power. The margin increase reflects that the company was able to convert a higher percentage of sales into actual profit over time.
- Overall Analysis
- The data reveals a strong financial performance characterized by robust sales growth accompanied by an even greater increase in net income. The company has successfully enhanced its profitability margins, suggesting effective cost control and operational leverage. These combined trends point to an overall positive business trajectory with sustainable growth potential.
Return on Equity (ROE)
Generac Holdings Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Generac Holdings Inc. | 550,494) | 350,576) | 252,007) | 238,257) | 159,386) | |
| Stockholders’ equity attributable to Generac Holdings Inc. | 2,213,774) | 1,390,293) | 1,032,382) | 760,549) | 559,552) | |
| Profitability Ratio | ||||||
| ROE1 | 24.87% | 25.22% | 24.41% | 31.33% | 28.48% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 39.37% | 19.56% | — | — | — | |
| Eaton Corp. plc | 13.06% | 9.44% | — | — | — | |
| GE Aerospace | -16.17% | 16.04% | — | — | — | |
| Honeywell International Inc. | 29.85% | 27.23% | — | — | — | |
| Lockheed Martin Corp. | 57.62% | 113.60% | — | — | — | |
| RTX Corp. | 5.29% | -4.88% | — | — | — | |
| ROE, Sector | ||||||
| Capital Goods | 8.48% | 4.42% | — | — | — | |
| ROE, Industry | ||||||
| Industrials | 15.38% | 0.24% | — | — | — | |
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 attributable to Generac Holdings Inc. ÷ Stockholders’ equity attributable to Generac Holdings Inc.
= 100 × 550,494 ÷ 2,213,774 = 24.87%
2 Click competitor name to see calculations.
- Net Income Attributable to Generac Holdings Inc.
- The net income demonstrates a consistent upward trend over the five-year period. Starting at $159.4 million in 2017, it increased substantially each year, reaching $550.5 million by the end of 2021. This indicates strong profitability growth and effective operational performance throughout the period.
- Stockholders’ Equity Attributable to Generac Holdings Inc.
- Stockholders’ equity also shows a steady increase from $559.6 million in 2017 to $2.21 billion in 2021. The growth is particularly notable between 2020 and 2021, where equity increased by approximately 59%, suggesting significant retention of earnings or possible capital injections during this period, enhancing the company's financial base.
- Return on Equity (ROE)
- The ROE fluctuated moderately within a relatively narrow range. It peaked at 31.33% in 2018, declined to 24.41% in 2019, then showed slight recovery to 25.22% in 2020, and settled at 24.87% in 2021. Despite the fluctuations, the ROE remained in the mid-20% range, indicating sustained profitability relative to equity, though the decline after 2018 may suggest increased equity outpacing net income growth or changes in operational efficiency.
- Overall Observations
- The financial data reflects a healthy growth trajectory with increasing profitability and equity base over the five years. While net income and equity expansions are strong, the slight decline in ROE after 2018 signals the need for monitoring capital efficiency in future periods. The company's ability to generate substantial net income and grow its equity represents a robust financial position.
Return on Assets (ROA)
Generac Holdings Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Generac Holdings Inc. | 550,494) | 350,576) | 252,007) | 238,257) | 159,386) | |
| Total assets | 4,877,780) | 3,235,423) | 2,665,669) | 2,426,314) | 2,019,964) | |
| Profitability Ratio | ||||||
| ROA1 | 11.29% | 10.84% | 9.45% | 9.82% | 7.89% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Boeing Co. | -3.03% | -7.80% | — | — | — | |
| Caterpillar Inc. | 7.84% | 3.83% | — | — | — | |
| Eaton Corp. plc | 6.30% | 4.43% | — | — | — | |
| GE Aerospace | -3.28% | 2.25% | — | — | — | |
| Honeywell International Inc. | 8.60% | 7.40% | — | — | — | |
| Lockheed Martin Corp. | 12.41% | 13.47% | — | — | — | |
| RTX Corp. | 2.39% | -2.17% | — | — | — | |
| ROA, Sector | ||||||
| Capital Goods | 1.86% | 0.80% | — | — | — | |
| ROA, Industry | ||||||
| Industrials | 3.40% | 0.04% | — | — | — | |
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 attributable to Generac Holdings Inc. ÷ Total assets
= 100 × 550,494 ÷ 4,877,780 = 11.29%
2 Click competitor name to see calculations.
- Net Income
- Net income attributable to the entity showed a consistent upward trend over the five-year period. It increased from $159.4 million at the end of 2017 to $550.5 million by the end of 2021. The growth was particularly pronounced between 2020 and 2021, with a substantial jump of nearly 57%, indicating improved profitability and operational performance.
- Total Assets
- Total assets steadily grew each year, starting from approximately $2.02 billion in 2017 and reaching $4.88 billion by 2021. The asset base more than doubled within the five-year span, which suggests significant investments or acquisitions that expanded the company's asset holdings. The most notable increase occurred between 2020 and 2021, mirroring the strong net income growth period.
- Return on Assets (ROA)
- The return on assets ratio displayed a positive trajectory, improving from 7.89% in 2017 to 11.29% in 2021. Despite a slight dip in 2019, ROA resumed its upward trend in 2020 and 2021. This improvement indicates enhanced efficiency in utilizing assets to generate earnings over time, reflecting stronger operational management or higher margins.
- Overall Analysis
- The data indicates robust financial performance and growth. Increasing net income alongside expanding assets points to effective scaling of operations. The rising ROA suggests that asset utilization improved, contributing to profitability gains. The acceleration in growth during the last two years of the period analyzed may reflect strategic initiatives or favorable market conditions.