Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Analysis of Liquidity Ratios
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- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Debt
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Profitability Ratios (Summary)
Stryker 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).
The financial data indicates several notable trends in the profitability and efficiency measures across the analyzed years.
- Gross Profit Margin
- Values remained relatively stable, fluctuating slightly between approximately 63.11% and 65.72%. This suggests a consistent ability to generate profit from sales after accounting for the cost of goods sold, with only a modest decline observed in 2020.
- Operating Profit Margin
- The operating profit margin exhibited a declining trend from 18.65% in 2018 to a low of 15.1% in 2021. Despite a slight improvement from 2020 to 2021, this downward trajectory points to increasing operating expenses or other factors eroding operating profitability over time.
- Net Profit Margin
- The net profit margin showed substantial volatility, peaking sharply at 26.12% in 2018, before declining to levels around 11% in the subsequent years. The sharp increase in 2018 suggests exceptional gains or non-recurring income, while the more moderate margins in later years reflect a normalization of net earnings relative to revenues.
- Return on Equity (ROE)
- ROE displayed a similar pattern to net profit margin, surging to 30.29% in 2018 from 10.23% in 2017, then falling to near 13.4% in 2021. This indicates that the ability to generate returns on shareholders' equity experienced a significant spike, likely linked to the same factors affecting net profit margin, followed by a reversion to more typical levels.
- Return on Assets (ROA)
- ROA rose notably from 4.6% in 2017 to 13.05% in 2018, then decreased to 5.76% in 2021. This trend suggests that asset utilization for generating profits improved dramatically in 2018 but declined significantly afterward, though remaining slightly higher than the starting value.
Overall, the data highlights a pronounced spike in profitability and efficiency measures in 2018, followed by a return to more moderate but still positive performance levels in subsequent years. The gross profit margin remained relatively steady throughout, while operating margin gradually decreased, indicating rising costs or operational challenges. The fluctuations in net profit margin, ROE, and ROA signal episodic performance factors impacting overall returns.
Return on Sales
Return on Investment
Gross Profit Margin
Stryker 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 millions) | ||||||
| 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.
- Net Sales
- Net sales demonstrated a consistent upward trend from 2017 through 2021, increasing from 12,444 million USD to 17,108 million USD. This reflects overall growth in revenue, with a slight decline observed only in 2020, where sales decreased to 14,351 million USD from 14,884 million USD in the previous year.
- Gross Profit
- Gross profit followed a generally positive trajectory over the analyzed period, rising from 8,173 million USD in 2017 to a peak of 10,968 million USD in 2021. A minor dip occurred in 2020, with gross profit decreasing to 9,057 million USD compared to 9,696 million USD in 2019, mirroring the decline seen in net sales that year.
- Gross Profit Margin
- The gross profit margin exhibited relative stability but with some fluctuation. It remained around the mid-60% range, starting at 65.68% in 2017 and experiencing slight variations, reaching its lowest point at 63.11% in 2020 before partially recovering to 64.11% in 2021. This suggests some pressure on profitability in 2020, potentially due to changes in cost structure or pricing dynamics.
- Overall Trend and Insights
- The data indicate steady revenue growth and profitability improvement over the five-year span, notwithstanding the temporary setback in 2020. The decline in both net sales and gross profit during 2020 hints at external challenges affecting performance, yet recovery in 2021 suggests resilience. The gross profit margin's mild decrease in 2020 points toward possible increased costs or lower pricing power during that year, but the margin remains solidly above 60%, signifying continued effective cost management and pricing strategies.
Operating Profit Margin
Stryker 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 millions) | ||||||
| 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
- The net sales exhibited a consistent upward trend over the analyzed periods, increasing from $12,444 million in 2017 to $17,108 million in 2021. Despite a slight decrease in 2020 to $14,351 million, sales rebounded strongly in 2021, reaching the highest recorded figure in this timeframe.
- Operating Income
- Operating income showed growth from $2,290 million in 2017 to a peak of $2,713 million in 2019, followed by a decline to $2,223 million in 2020. However, it recovered in 2021, reaching $2,584 million, indicating resilience despite the 2020 setback.
- Operating Profit Margin
- The operating profit margin demonstrated a generally declining trend. Starting at 18.4% in 2017, it slightly increased to 18.65% in 2018, after which it consistently decreased year-over-year to 15.1% by 2021. The margin decline suggests challenges in maintaining profitability relative to sales growth.
- Overall Analysis
- The data indicates strong revenue expansion with net sales growing substantially over the five-year period. However, operating income and profit margins reveal pressures on profitability, particularly evident in the decline during and after 2019. The dip in 2020 across all key metrics likely reflects external challenges impacting operations. The recovery in 2021 in terms of sales and operating income is notable, although the reduced operating profit margin points to potential cost increases or pricing pressures impacting earnings efficiency.
Net Profit Margin
Stryker Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings | ||||||
| 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 earnings ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Earnings
- Net earnings demonstrated significant volatility over the analyzed period. Starting at $1,020 million in 2017, they peaked sharply at $3,553 million in 2018, indicating a remarkable increase. Subsequently, earnings declined to $2,083 million in 2019, followed by further reduction to $1,599 million in 2020. The year 2021 saw a moderate recovery with net earnings rising to $1,994 million, although still below the 2018 peak.
- Net Sales
- Net sales showed a generally upward trend from 2017 through 2021. Beginning at $12,444 million in 2017, sales increased steadily, reaching $13,601 million in 2018 and $14,884 million in 2019. There was a slight dip in 2020 to $14,351 million, possibly reflecting external challenges. However, sales rebounded significantly in 2021, reaching $17,108 million, the highest value within the timeframe.
- Net Profit Margin
- The net profit margin exhibited notable fluctuations. The margin was 8.2% in 2017, followed by a sharp increase to 26.12% in 2018, corresponding with the peak in net earnings. After 2018, the margin declined to 13.99% in 2019 and further to 11.14% in 2020. A slight improvement was seen in 2021 with a margin of 11.66%, aligning with the partial recovery in net earnings but remaining substantially lower than the 2018 level.
- Overall Trends and Insights
- Throughout the period, net sales experienced consistent growth with minor setbacks, suggesting steady demand and potential expansion in market reach. Net earnings and profit margin, however, were more volatile, peaking in 2018 and then declining in subsequent years. The pronounced peak in 2018 might reflect a one-time gain or exceptional operational efficiency during that year. The decrease in profitability ratios post-2018, despite increasing sales, could indicate rising costs, pricing pressures, or changes in business mix affecting margins. The rebound in sales and moderate recovery in earnings in 2021 suggests resilience and potential for improved profitability moving forward, though margins remain below the earlier peak.
Return on Equity (ROE)
Stryker Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings | ||||||
| Total Stryker shareholders’ 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 earnings ÷ Total Stryker shareholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data over the five-year period reveals several key trends and insights related to profitability, equity growth, and return on equity (ROE).
- Net Earnings
- Net earnings experienced a significant increase from 2017 to 2018, rising sharply from $1,020 million to $3,553 million. Following this peak, there was a notable decline in 2019 to $2,083 million, and the downward trend continued into 2020, where earnings further decreased to $1,599 million. In 2021, a recovery is observed as net earnings increased to $1,994 million, although this figure remains well below the 2018 peak.
- Total Shareholders’ Equity
- The total shareholders’ equity demonstrated consistent growth throughout the period. Starting at $9,966 million in 2017, equity rose steadily each year, reaching $14,877 million in 2021. This indicates a continuous strengthening of the company’s capital base and retained earnings over the five-year span.
- Return on Equity (ROE)
- ROE follows a pattern similar to net earnings, peaking at 30.29% in 2018. After this peak, ROE declined to 16.26% in 2019 and continued to fall to 12.22% in 2020. There was a modest improvement to 13.4% in 2021, though it did not return to earlier highs. This trend suggests that while the company has increased its equity base, its efficiency in generating profits from shareholders' equity declined after 2018 and only moderately recovered by 2021.
- Overall Insights
- The data reveals a volatile profit performance with an exceptional year in 2018, followed by a reduction in net earnings and ROE. Despite this volatility in profitability, the company's shareholders' equity consistently grew, reflecting possible shareholder reinvestment, retained earnings, or equity financing. The reduction in ROE from 2018 onward, despite equity growth, suggests a need to examine operational efficiency or profitability drivers. The partial recovery in both net earnings and ROE in 2021 is a positive indication but still below peak levels, signaling potential challenges or shifts in market conditions during the analyzed period.
Return on Assets (ROA)
Stryker Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings | ||||||
| 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 earnings ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net earnings
- The net earnings exhibit considerable volatility across the observed periods. Starting at 1020 million US dollars in 2017, there is a marked increase to 3553 million in 2018. Subsequently, net earnings decline to 2083 million in 2019 and continue to decrease to 1599 million in 2020. A recovery is observed in 2021, where net earnings rise to 1994 million, although this level remains below the peak reached in 2018.
- Total assets
- Total assets demonstrate a steady upward trend throughout the years. Beginning at 22197 million US dollars in 2017, assets have increased consistently each year, reaching 34631 million by the end of 2021. This reflects ongoing growth in the company’s asset base over the five-year period.
- Return on Assets (ROA)
- The ROA shows fluctuating performance relative to asset growth and net earnings. It peaked in 2018 at 13.05%, coinciding with the highest net earnings over the period. Following this peak, ROA declines sharply to 6.9% in 2019 and declines further to 4.66% in 2020. In 2021, there is a slight recovery to 5.76%. Despite the increase in total assets each year, the efficiency of asset utilization to generate returns has diminished after 2018, with modest improvement occurring in the final year.
- Summary
- Overall, the financial data indicates a period of peak profitability in 2018, followed by declining net earnings and diminishing asset returns until 2020. While total assets have grown steadily, the company’s ability to convert these assets into net earnings declined after 2018, with only a partial recovery evident in 2021. This suggests challenges in maintaining high profitability in the later years despite asset expansion.