Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Income Statement
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2005
- Current Ratio since 2005
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Profitability Ratios (Summary)
Raytheon Co., profitability ratios
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
- Gross profit margin
- The gross profit margin exhibited a generally positive trend over the period under review, increasing from 24.4% in 2015 to a peak of 27.66% in 2018. This was followed by a slight decline to 26.61% in 2019, indicating a relatively stable ability to manage production costs and pricing strategies over time.
- Operating profit margin
- The operating profit margin demonstrated consistent growth from 12.96% in 2015 to 16.77% in 2018, with a minor reduction to 16.36% in 2019. This pattern reflects improved operating efficiency and effective control of administrative and operating expenses during the period.
- Net profit margin
- The net profit margin showed a fluctuating but upward trajectory, beginning at 8.92% in 2015, dipping to 7.98% in 2017, and subsequently rising to reach 11.46% by 2019. This suggests enhanced overall profitability, likely driven by improved operating results and possibly favorable financing or tax conditions.
- Return on equity (ROE)
- Return on equity increased steadily from 20.48% in 2015 to 27.35% in 2019, with a noticeable acceleration after 2017. This positive trend signals effective utilization of shareholders' equity to generate profits, reflecting strong management performance and possibly growing earnings retention.
- Return on assets (ROA)
- The return on assets also trended upward, rising from 7.08% in 2015 to 9.67% in 2019. The increase was particularly marked after 2017, indicating improved efficiency in asset utilization to produce net income.
Return on Sales
Return on Investment
Gross Profit Margin
Raytheon Co., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross margin | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Gross profit margin = 100 × Gross margin ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Sales
- Net sales demonstrated a consistent upward trend over the five-year period, increasing from $23,247 million in 2015 to $29,176 million in 2019. This represents a steady growth rate, with the company expanding its revenue base each year.
- Gross Margin
- Gross margin also showed positive growth, rising from $5,673 million in 2015 to $7,763 million in 2019. The increase in gross margin aligned with the growth in net sales, indicating effective management of production costs relative to revenue.
- Gross Profit Margin Percentage
- The gross profit margin percentage fluctuated somewhat over the period. Starting at 24.4% in 2015, it increased to a peak of 27.66% in 2018 before slightly declining to 26.61% in 2019. Overall, the margin improved compared to the initial years, indicating enhancements in cost efficiency or pricing power, despite the small dip in the final year.
Operating Profit Margin
Raytheon Co., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Income
- The operating income exhibits a steady upward trend over the five-year period. Beginning at $3,013 million in 2015, it rises each year, reaching $4,774 million by 2019. The increase is particularly notable between 2017 and 2018, where the figure jumps significantly from $3,318 million to $4,538 million, indicating enhanced operational profitability in that timeframe.
- Net Sales
- Net sales show consistent growth throughout the period analyzed. Starting at $23,247 million in 2015, sales increase annually to reach $29,176 million by 2019. The gradual increase reflects steady market expansion or improved sales effectiveness, with year-over-year increases ranging roughly between 3% and 7%.
- Operating Profit Margin
- The operating profit margin remains relatively stable with slight fluctuations initially, moving from 12.96% in 2015 to 13.46% in 2016 and dipping slightly to 13.09% in 2017. However, from 2017 to 2018, there is a marked improvement to 16.77%, indicating a better conversion of sales into operating profit. This elevated margin is largely sustained in 2019 at 16.36%, suggesting improved operational efficiency and cost management during the latter years.
- Summary
- Overall, the data reflect positive financial performance characterized by increasing sales and substantial improvements in operating income and profit margins especially after 2017. The sharp rise in operating income and operating margin from 2017 onwards suggests successful strategic initiatives or favorable market conditions enhancing profitability beyond the steady sales growth observed. This pattern indicates an improvement in the company’s cost structure, pricing power, or product mix contributing to enhanced operational results.
Net Profit Margin
Raytheon Co., net profit margin calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Raytheon Company | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Net profit margin = 100 × Net income attributable to Raytheon Company ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net income attributable to Raytheon Company
- The net income exhibited a generally increasing trend over the five-year period. Starting at 2,074 million USD in 2015, it rose to 2,211 million USD in 2016, followed by a slight decline to 2,024 million USD in 2017. Subsequently, there was a significant increase in 2018 to 2,909 million USD, with a further rise reaching 3,343 million USD in 2019. This pattern indicates an overall enhancement in profitability, despite the minor setback in 2017.
- Net sales
- Net sales showed a consistent upward trajectory from 2015 through 2019. The figures increased steadily each year from 23,247 million USD in 2015 to 29,176 million USD in 2019. This consistent growth points to an expanding business volume or improved sales performance during the period under review.
- Net profit margin
- The net profit margin percentage fluctuated but demonstrated improvement overall. Starting at 8.92% in 2015, it increased slightly to 9.19% in 2016 before decreasing to 7.98% in 2017. Following this decline, the margin rose more substantially to 10.75% in 2018 and further increased to 11.46% in 2019. The upward trend after 2017 reflects enhanced operational efficiency or better cost management contributing to higher profitability relative to sales.
Return on Equity (ROE)
Raytheon Co., ROE calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Raytheon Company | ||||||
| Total Raytheon Company stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
ROE = 100 × Net income attributable to Raytheon Company ÷ Total Raytheon Company stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- The net income attributable to the company exhibited a generally upward trend over the five-year period. Starting at 2,074 million US dollars in 2015, it rose to 3,343 million US dollars in 2019. There was a slight decline in 2017 compared to 2016, but the income rebounded significantly in subsequent years, reaching its peak in 2019.
- Stockholders’ Equity
- The total stockholders’ equity remained relatively stable from 2015 to 2017, showing a modest decrease from 10,128 million US dollars to 9,963 million US dollars. However, from 2018 onwards, equity rose, reaching 12,223 million US dollars in 2019, indicating a strengthening of the company’s financial base in the latter years.
- Return on Equity (ROE)
- Return on equity fluctuated moderately, starting at 20.48% in 2015, peaking at 21.97% in 2016, and then decreasing slightly in 2017 to 20.32%. After that, ROE increased significantly, hitting 25.36% in 2018 and further improving to 27.35% by 2019. This suggests enhanced profitability relative to shareholders' equity during the latter part of the period.
- Overall Analysis
- The company demonstrated solid growth in net income and improved profitability as indicated by increasing ROE, especially after 2017. While stockholders’ equity experienced minor contractions early on, it recovered and expanded by the end of the period. These patterns reflect effective financial management and increasing returns to shareholders over the assessed timeframe.
Return on Assets (ROA)
Raytheon Co., ROA calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Raytheon Company | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
ROA = 100 × Net income attributable to Raytheon Company ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income attributable to Raytheon Company
- The net income showed a generally increasing trend over the period from 2015 to 2019. Starting at 2,074 million US dollars in 2015, the net income increased slightly to 2,211 million in 2016, experienced a modest decline to 2,024 million in 2017, then rose significantly to 2,909 million in 2018, and continued the upward trajectory to 3,343 million in 2019. The growth in net income from 2017 onwards indicates improving profitability.
- Total Assets
- Total assets exhibited a steady increase throughout the five-year span. Beginning at 29,281 million US dollars in 2015, assets grew incrementally each year, reaching 34,566 million by 2019. This consistent growth in assets suggests expansion or accumulation of company resources over time.
- Return on Assets (ROA)
- The ROA percentage followed a similar pattern to net income, with some fluctuations. It increased from 7.08% in 2015 to 7.36% in 2016, then decreased to 6.56% in 2017. Subsequently, it experienced notable improvement, rising to 9.13% in 2018 and further to 9.67% in 2019. This pattern reflects enhanced efficiency in generating net income from the assets owned during the later years.
- Summary
- Overall, the data indicates progressive growth in profitability and asset base over the reviewed period. Despite a minor setback in 2017 observed in net income and ROA, both metrics improved substantially in the following years, reaching their highest levels in 2019. The increase in total assets suggests expansion, while the rising ROA signifies improved asset utilization effectiveness, supporting stronger financial performance towards the end of the period.