Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Hubbell Inc., profitability ratios
Based on: 10-K (reporting date: 2022-12-31), 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).
The profitability profile from 2018 to 2022 exhibits a general trend of expansion, particularly in the final two years of the period. While margins remained relatively stable during the initial years, a significant acceleration in bottom-line efficiency and capital utilization is evident by the end of 2022.
- Profitability Margins
- Gross profit margin remained relatively stable, fluctuating between 27.46% and 29.74%. A slight contraction was observed in 2021, which was followed by a recovery to a five-year peak of 29.74% in 2022. Operating profit margin showed consistent resilience, maintaining a range around 12% before experiencing a notable increase to 14.33% in 2022. Net profit margin demonstrated the most consistent upward trajectory, rising from 8.04% in 2018 to 11.03% in 2022, suggesting an improvement in the conversion of revenue to actual profit.
- Returns on Investment
- Return on Equity (ROE) and Return on Assets (ROA) both experienced a synchronized contraction in 2020, with ROE dipping to 16.97% and ROA falling to 6.91%. Following this decline, a strong recovery trend emerged, culminating in 2022 where ROE reached 23.12% and ROA climbed to 10.10%. These figures indicate a strengthened ability to generate earnings relative to both the company's asset base and shareholder equity.
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Gross Profit Margin
Hubbell Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | 1,471,600) | 1,151,500) | 1,209,300) | 1,352,700) | 1,300,400) | |
| Net sales | 4,947,900) | 4,194,100) | 4,186,000) | 4,591,000) | 4,481,700) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 29.74% | 27.46% | 28.89% | 29.46% | 29.02% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Boeing Co. | 5.26% | 4.84% | — | — | — | |
| Caterpillar Inc. | 26.91% | 26.30% | — | — | — | |
| Eaton Corp. plc | 33.19% | 32.28% | — | — | — | |
| GE Aerospace | 24.55% | 24.19% | — | — | — | |
| Honeywell International Inc. | 36.99% | 35.85% | — | — | — | |
| Lockheed Martin Corp. | 12.56% | 13.52% | — | — | — | |
| RTX Corp. | 20.38% | 19.40% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × 1,471,600 ÷ 4,947,900 = 29.74%
2 Click competitor name to see calculations.
The financial performance from 2018 to 2022 reflects a period of moderate volatility followed by a strong recovery in both top-line revenue and profitability margins.
- Net Sales Trends
- Net sales grew slightly from 2018 to 2019, reaching 4.59 billion USD, before experiencing a contraction in 2020 and 2021, where values remained stagnant around 4.19 billion USD. A significant expansion occurred in 2022, with sales increasing to 4.95 billion USD, representing the highest volume in the observed five-year period.
- Gross Profit Performance
- Gross profit mirrored the trajectory of net sales, peaking in 2022 at 1.47 billion USD. A steady decline was noted between 2019 and 2021, with the lowest point occurring in 2021 at 1.15 billion USD, coinciding with the period of lowest net sales.
- Gross Profit Margin Analysis
- The gross profit margin exhibited relative stability, fluctuating within a narrow range of approximately 2.3 percentage points. After a peak of 29.46% in 2019, the margin contracted to a period low of 27.46% in 2021. This downward trend reversed sharply in 2022, with the margin climbing to 29.74%, indicating an improvement in cost efficiency or pricing strategies during the recovery phase.
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Operating Profit Margin
Hubbell Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Operating income | 709,100) | 532,300) | 533,000) | 596,600) | 556,900) | |
| Net sales | 4,947,900) | 4,194,100) | 4,186,000) | 4,591,000) | 4,481,700) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 14.33% | 12.69% | 12.73% | 12.99% | 12.43% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Boeing Co. | -5.33% | -4.66% | — | — | — | |
| Caterpillar Inc. | 13.97% | 14.27% | — | — | — | |
| Eaton Corp. plc | 14.55% | 15.69% | — | — | — | |
| GE Aerospace | 6.05% | 8.58% | — | — | — | |
| Honeywell International Inc. | 18.12% | 18.03% | — | — | — | |
| Lockheed Martin Corp. | 12.65% | 13.61% | — | — | — | |
| RTX Corp. | 8.07% | 7.70% | — | — | — | |
| Operating Profit Margin, Sector | ||||||
| Capital Goods | 8.29% | 9.11% | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Industrials | 9.06% | 9.24% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × 709,100 ÷ 4,947,900 = 14.33%
2 Click competitor name to see calculations.
The financial performance from 2018 to 2022 is characterized by a period of relative stability in operating efficiency followed by a significant expansion in profitability in the final year. While net sales and operating income experienced a contraction between 2019 and 2021, the operating profit margin remained remarkably consistent, suggesting effective cost management during periods of revenue volatility.
- Operating Profit Margin Trend
- The operating profit margin exhibited minimal variance between 2018 and 2021, fluctuating within a narrow range from 12.43% to 12.99%. A substantial increase is observed in 2022, where the margin rose to 14.33%, marking the highest level of operational profitability within the five-year period.
- Revenue and Income Correlation
- Net sales peaked in 2019 at 4.59 billion US dollars before declining to a low of 4.18 billion US dollars in 2020. A similar pattern is observed in operating income, which decreased from 596.6 million US dollars in 2019 to 532.3 million US dollars by 2021. However, 2022 saw a sharp recovery, with net sales reaching 4.94 billion US dollars and operating income increasing to 709.1 million US dollars.
- Operational Leverage and Efficiency
- The transition from 2021 to 2022 indicates strong operational leverage. The increase in operating income (approximately 33.2%) significantly outpaced the growth in net sales (approximately 18.1%) during this interval. This divergence resulted in a 164 basis point expansion of the operating profit margin, suggesting improved pricing power or a more favorable product mix.
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Net Profit Margin
Hubbell Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Hubbell Incorporated | 545,900) | 399,500) | 351,200) | 400,900) | 360,200) | |
| Net sales | 4,947,900) | 4,194,100) | 4,186,000) | 4,591,000) | 4,481,700) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 11.03% | 9.53% | 8.39% | 8.73% | 8.04% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Boeing Co. | -7.41% | -6.75% | — | — | — | |
| Caterpillar Inc. | 11.85% | 13.47% | — | — | — | |
| Eaton Corp. plc | 11.86% | 10.92% | — | — | — | |
| GE Aerospace | 0.31% | -9.17% | — | — | — | |
| Honeywell International Inc. | 14.00% | 16.11% | — | — | — | |
| Lockheed Martin Corp. | 8.69% | 9.42% | — | — | — | |
| RTX Corp. | 7.75% | 6.00% | — | — | — | |
| Net Profit Margin, Sector | ||||||
| Capital Goods | 5.27% | 3.71% | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Industrials | 5.04% | 5.85% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Net profit margin = 100 × Net income attributable to Hubbell Incorporated ÷ Net sales
= 100 × 545,900 ÷ 4,947,900 = 11.03%
2 Click competitor name to see calculations.
A consistent upward trajectory in profitability is observed over the five-year period ending December 31, 2022. Despite a temporary contraction in 2020, the overall trend indicates a sustained improvement in the conversion of net sales into net income.
- Net Profit Margin Progression
- The net profit margin increased from 8.04% in 2018 to 11.03% in 2022. A moderate decline occurred in 2020, with the margin retreating to 8.39%, before recovering to 9.53% in 2021 and reaching a period high of 11.03% in 2022.
- Revenue and Income Correlation
- Net sales and net income demonstrated a synchronized movement during the period. A contraction in net sales to 4,186,000 thousand US dollars in 2020 coincided with a reduction in net income to 351,200 thousand US dollars. Conversely, 2022 saw a substantial expansion in both metrics, with net sales rising to 4,947,900 thousand US dollars and net income increasing to 545,900 thousand US dollars.
- Operational Efficiency and Margin Expansion
- The most significant expansion in profitability occurred between 2021 and 2022. During this interval, the growth rate of net income outpaced the growth rate of net sales, resulting in a margin increase of 150 basis points. This suggests enhanced operational efficiency or a favorable shift in pricing power and cost management during the final year of the analyzed period.
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Return on Equity (ROE)
Hubbell Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Hubbell Incorporated | 545,900) | 399,500) | 351,200) | 400,900) | 360,200) | |
| Total Hubbell Incorporated shareholders’ equity | 2,360,900) | 2,229,800) | 2,070,000) | 1,947,100) | 1,780,600) | |
| Profitability Ratio | ||||||
| ROE1 | 23.12% | 17.92% | 16.97% | 20.59% | 20.23% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 42.25% | 39.37% | — | — | — | |
| Eaton Corp. plc | 14.45% | 13.06% | — | — | — | |
| GE Aerospace | 0.62% | -16.17% | — | — | — | |
| Honeywell International Inc. | 29.74% | 29.85% | — | — | — | |
| Lockheed Martin Corp. | 61.86% | 57.62% | — | — | — | |
| RTX Corp. | 7.16% | 5.29% | — | — | — | |
| ROE, Sector | ||||||
| Capital Goods | 13.39% | 8.48% | — | — | — | |
| ROE, Industry | ||||||
| Industrials | 15.38% | 15.38% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
ROE = 100 × Net income attributable to Hubbell Incorporated ÷ Total Hubbell Incorporated shareholders’ equity
= 100 × 545,900 ÷ 2,360,900 = 23.12%
2 Click competitor name to see calculations.
The financial performance from 2018 to 2022 demonstrates a period of volatility followed by a significant expansion in profitability and capital efficiency. While the equity base grew consistently throughout the five-year period, fluctuations in net income drove the corresponding changes in the return on equity.
- Net Income Trends
- Net income showed an initial increase in 2019, followed by a contraction in 2020 to 351.2 million US dollars. A robust recovery followed, with a sharp acceleration in 2022, where net income reached a peak of 545.9 million US dollars, marking a substantial increase over the baseline established in 2018.
- Shareholders' Equity Growth
- Total shareholders' equity exhibited a steady and uninterrupted upward trend, increasing every year from 1.78 billion US dollars in 2018 to 2.36 billion US dollars in 2022. This consistent growth reflects a continuous accumulation of capital and retained earnings over the analyzed period.
- Return on Equity (ROE) Analysis
- Return on equity remained stable at approximately 20% during 2018 and 2019 before experiencing a decline to 16.97% in 2020. This dip was the result of decreased net income occurring simultaneously with a growing equity base. However, a strong upward trend followed, culminating in a five-year high of 23.12% in 2022. This indicates that the growth in net income in the final year significantly outpaced the growth of equity, resulting in improved efficiency in generating profits from shareholders' investments.
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Return on Assets (ROA)
Hubbell Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Hubbell Incorporated | 545,900) | 399,500) | 351,200) | 400,900) | 360,200) | |
| Total assets | 5,402,600) | 5,281,500) | 5,085,100) | 4,903,000) | 4,872,100) | |
| Profitability Ratio | ||||||
| ROA1 | 10.10% | 7.56% | 6.91% | 8.18% | 7.39% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Boeing Co. | -3.60% | -3.03% | — | — | — | |
| Caterpillar Inc. | 8.18% | 7.84% | — | — | — | |
| Eaton Corp. plc | 7.03% | 6.30% | — | — | — | |
| GE Aerospace | 0.12% | -3.28% | — | — | — | |
| Honeywell International Inc. | 7.97% | 8.60% | — | — | — | |
| Lockheed Martin Corp. | 10.84% | 12.41% | — | — | — | |
| RTX Corp. | 3.27% | 2.39% | — | — | — | |
| ROA, Sector | ||||||
| Capital Goods | 2.84% | 1.86% | — | — | — | |
| ROA, Industry | ||||||
| Industrials | 3.31% | 3.40% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
ROA = 100 × Net income attributable to Hubbell Incorporated ÷ Total assets
= 100 × 545,900 ÷ 5,402,600 = 10.10%
2 Click competitor name to see calculations.
An examination of the financial performance from 2018 to 2022 reveals a general trend of improving asset utilization, culminating in a significant peak in operational efficiency by the end of the period.
- Net Income Volatility and Growth
- Net income exhibited fluctuations between 2018 and 2021, with a notable dip to $351.2 million in 2020. However, a substantial increase was recorded in 2022, where net income rose to $545.9 million, marking the highest profit level within the analyzed timeframe.
- Asset Base Expansion
- Total assets demonstrated a consistent and steady upward trajectory throughout the five-year period. The asset base grew from $4.87 billion in 2018 to $5.40 billion by December 31, 2022, indicating a continuous expansion of the company's resources.
- Return on Assets (ROA) Performance
- The ROA experienced a period of instability before achieving a strong upward break. After rising to 8.18% in 2019, the ratio declined to a period low of 6.91% in 2020, driven by the simultaneous decrease in net income and increase in total assets. A recovery phase followed in 2021 (7.56%), leading to a significant surge to 10.10% in 2022. This final increase indicates that income growth substantially outpaced asset growth, resulting in a marked improvement in the efficiency with which assets are utilized to generate profit.
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