Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Income Statement
- Cash Flow Statement
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Assets (ROA) since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Debt
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Profitability Ratios (Summary)
Humana Inc., profitability ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Return on Sales | ||||||
| Operating profit margin | ||||||
| Net profit margin | ||||||
| Return on Investment | ||||||
| Return on equity (ROE) | ||||||
| Return on assets (ROA) | ||||||
Based on: 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), 10-K (reporting date: 2019-12-31).
The analysis of the financial ratios over the five-year period from 2019 to 2023 reveals discernible trends regarding profitability and efficiency metrics.
- Operating Profit Margin
- The operating profit margin exhibited an initial increase from 4.96% in 2019 to a peak of 6.56% in 2020. Subsequently, this margin declined to 3.8% in 2021, followed by a slight improvement to 4.11% in 2022, before decreasing again to 3.81% in 2023. Overall, the margin showed volatility with a general downward trend after 2020.
- Net Profit Margin
- The net profit margin followed a decreasing pattern after a modest increase from 4.2% in 2019 to 4.43% in 2020. Post-2020, the margin continuously declined year-over-year, reaching 2.36% by 2023. This consistent decline indicates diminishing net profitability relative to revenue over the period.
- Return on Equity (ROE)
- Return on equity rose from 22.49% in 2019 to a high of 24.53% in 2020, reflecting strong profitability relative to shareholders' equity during that year. However, ROE steadily decreased in subsequent years to 15.31% by 2023, marking a substantial decline. This suggests reduced efficiency in generating returns for equity holders over time.
- Return on Assets (ROA)
- The return on assets ratio showed a similar trend to ROE, with a peak of 9.63% in 2020 before falling to 5.29% in 2023. The decline in ROA indicates a decrease in the company’s ability to generate profit from its total asset base.
In summary, the data demonstrates that while 2020 was a year of strong financial performance across all measured profitability ratios, subsequent years saw a downward trajectory. Both profitability margins and returns declined, suggesting increasing pressures on margins and asset and equity efficiency from 2021 through 2023.
Return on Sales
Return on Investment
Operating Profit Margin
Humana Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Income from operations | ||||||
| External revenues | ||||||
| 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: 2023-12-31), 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).
1 2023 Calculation
Operating profit margin = 100 × Income from operations ÷ External revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Income from operations
- The income from operations shows significant fluctuations over the analyzed periods. It increased sharply from 3,192 million USD in 2019 to 4,986 million USD in 2020. However, it experienced a notable decline to 3,148 million USD in 2021, followed by gradual increases in 2022 and 2023, reaching 3,800 million USD and 4,013 million USD respectively. Despite the recovery in the latter years, the 2023 figure remains below the peak observed in 2020.
- External revenues
- External revenues illustrate a consistent upward trajectory across all the years considered. Starting at 64,387 million USD in 2019, revenues steadily rose each year, culminating in 105,305 million USD in 2023. This indicates sustained growth in the company's total external sales or service income over the period.
- Operating profit margin
- The operating profit margin reflects variability with an overall modest downward trend. It improved from 4.96% in 2019 to a peak of 6.56% in 2020, but then decreased markedly to 3.8% in 2021. Subsequent years saw a slight rebound to 4.11% in 2022, followed by a decline to 3.81% in 2023. This pattern suggests increasing pressure on operational efficiency or cost structure despite rising revenue levels.
Net Profit Margin
Humana Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Humana | ||||||
| External revenues | ||||||
| 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: 2023-12-31), 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).
1 2023 Calculation
Net profit margin = 100 × Net income attributable to Humana ÷ External revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data over the five-year period from 2019 to 2023 reveals several notable trends in profitability and revenue generation.
- Net Income
- The net income attributable to the company initially increased from $2,707 million in 2019 to a peak of $3,367 million in 2020. However, after this peak, net income demonstrated a gradual decline over the subsequent three years, falling to $2,933 million in 2021, $2,806 million in 2022, and further down to $2,489 million in 2023. This suggests some challenges in maintaining earnings levels despite other positive trends.
- External Revenues
- External revenues showed continuous and robust growth throughout the period. Starting at $64,387 million in 2019, revenues increased substantially each year, reaching $76,001 million in 2020, $82,877 million in 2021, $92,488 million in 2022, and $105,305 million in 2023. This steady upward trajectory indicates strong top-line expansion and effective revenue generation capabilities.
- Net Profit Margin
- The net profit margin exhibited a declining trend despite the increase in revenues. It rose slightly from 4.20% in 2019 to 4.43% in 2020, but thereafter showed a sharp decrease to 3.54% in 2021, followed by further declines to 3.03% in 2022 and 2.36% in 2023. This decline in profitability ratios implies rising costs or other factors eroding profit margins even as revenues grow.
In summary, while the company has succeeded in expanding its revenue considerably over these years, it faces decreasing profitability both in absolute net income terms and margin percentages. This combination suggests that cost management or pricing strategies may need to be addressed to improve earnings sustainability despite the positive revenue momentum.
Return on Equity (ROE)
Humana Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Humana | ||||||
| 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: 2023-12-31), 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).
1 2023 Calculation
ROE = 100 × Net income attributable to Humana ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the five-year period ending in 2023. The net income attributable to the company shows fluctuations, initially increasing from 2,707 million US dollars in 2019 to a peak of 3,367 million in 2020. Subsequently, net income experienced a decline in the following years, decreasing to 2,933 million in 2021, then to 2,806 million in 2022, and further down to 2,489 million in 2023.
Stockholders’ equity presents a generally upward trajectory throughout the period. Starting at 12,037 million US dollars in 2019, equity increased steadily to 13,728 million in 2020, then to 16,080 million in 2021. While there was a slight dip to 15,311 million in 2022, the equity rebounded to a new high of 16,262 million by the end of 2023.
Return on equity (ROE), expressed as a percentage, reflects the company's profitability relative to the equity base. The ROE was highest in 2020 at 24.53%, coinciding with the peak net income in the same year. Since then, the ROE has shown a downward trend, reducing to approximately 18.2% in 2021 and 18.3% in 2022, and further declining to 15.31% in 2023.
- Net Income Trends
- Experienced an initial increase in 2020, followed by a consistent decline through 2023.
- Stockholders’ Equity Trends
- Generally increased over the period with a temporary decline in 2022 before reaching the highest level in 2023.
- Return on Equity (ROE) Trends
- Peaked in 2020 correlating with net income performance, then progressively declined, indicating reduced profitability relative to equity despite overall growth in equity base.
Overall, the data indicates that while the company's equity base has grown over the years, net income and ROE have diminished since their 2020 highs. This suggests that the company’s efficiency in generating profit from its equity capital has decreased. The decline in profitability metrics amid rising equity could reflect increased capital without a proportional increase in earnings or other operational challenges impacting net income generation.
Return on Assets (ROA)
Humana Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Humana | ||||||
| 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: 2023-12-31), 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).
1 2023 Calculation
ROA = 100 × Net income attributable to Humana ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- The net income attributable to Humana showed an initial increase from 2,707 million US dollars in 2019 to 3,367 million in 2020. However, after this peak, there was a downward trend observed over the subsequent years, declining to 2,933 million in 2021, 2,806 million in 2022, and further to 2,489 million in 2023. This indicates a reduction in profitability over the last three years.
- Total Assets
- Total assets exhibited consistent growth throughout the period. Starting at 29,074 million US dollars in 2019, assets increased substantially to 34,969 million in 2020, followed by a significant jump to 44,358 million in 2021. There was a slight dip to 43,055 million in 2022, but the value recovered and increased again to 47,065 million by the end of 2023. Overall, total assets have grown markedly over the five-year span.
- Return on Assets (ROA)
- The return on assets showed a declining trend over the period. In 2019 it stood at 9.31%, increasing slightly to 9.63% in 2020, which coincided with the peak net income year. Subsequently, ROA decreased more pronouncedly to 6.61% in 2021, 6.52% in 2022, and further dropped to 5.29% in 2023. This decline suggests that the company’s efficiency in generating profit from its assets has weakened over time, particularly in the last three years.
- Summary
- The data reflects a company experiencing asset growth but facing challenges in sustaining profitability and efficiency. Despite rising total assets, net income has diminished following a peak in 2020, and the return on assets has concurrently decreased, indicating reduced effectiveness in utilizing the expanded asset base to generate earnings.