Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
United Parcel Service Inc., profitability ratios
Based on: 10-K (reporting date: 2024-12-31), 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).
- Operating Profit Margin
- The operating profit margin experienced a significant increase from 9.08% in 2020 to a peak of 13.17% in 2021. It remained relatively stable in 2022 at 13.05%, before declining to 10.05% in 2023 and further decreasing to 9.3% in 2024. This indicates an initial improvement in operational efficiency followed by a noticeable reduction in profitability from core operations over the last two years.
- Net Profit Margin
- The net profit margin showed a substantial rise from a low 1.59% in 2020 to 13.25% in 2021. After this peak, there was a gradual decline to 11.51% in 2022, then a sharper decrease to 7.37% in 2023 and 6.35% in 2024. This trend reflects a similar pattern to the operating margin but with a relatively larger decline after 2021, suggesting increased expenses or other factors impacting overall profitability beyond operating income.
- Return on Equity (ROE)
- Return on equity started exceptionally high at 204.41% in 2020, followed by a steep decline to 90.44% in 2021 and a continued drop to 58.36% in 2022. The downward trend persisted through 2023 and 2024 with ROE at 38.76% and 34.59%, respectively. Despite the decrease, the ROE remains considerably elevated, indicating strong returns to shareholders, though the diminishing trend suggests weakening efficiency in utilizing equity for generating profits.
- Return on Assets (ROA)
- The return on assets increased significantly from 2.15% in 2020 to 18.57% in 2021, then declined moderately to 16.24% in 2022. A more pronounced reduction is observed in 2023 and 2024, with ROA declining to 9.47% and 8.25%. This reflects an initial improvement in asset utilization followed by a sustained decrease, indicating less effective use of assets in generating earnings during the later periods.
Return on Sales
Return on Investment
Operating Profit Margin
United Parcel Service Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating profit | 8,468) | 9,141) | 13,094) | 12,810) | 7,684) | |
| Revenue | 91,070) | 90,958) | 100,338) | 97,287) | 84,628) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 9.30% | 10.05% | 13.05% | 13.17% | 9.08% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| FedEx Corp. | 6.34% | 5.45% | 6.68% | 6.98% | 3.49% | |
| Uber Technologies Inc. | 6.36% | 2.98% | -5.75% | -21.97% | -43.66% | |
| Union Pacific Corp. | 40.05% | 37.65% | 39.87% | 42.83% | 40.11% | |
| United Airlines Holdings Inc. | 8.93% | 7.84% | 5.20% | -4.15% | -41.41% | |
| Operating Profit Margin, Sector | ||||||
| Transportation | 10.40% | 9.61% | 10.07% | 9.44% | 3.36% | |
| Operating Profit Margin, Industry | ||||||
| Industrials | 9.94% | 9.90% | 9.06% | 9.24% | 3.13% | |
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
Operating profit margin = 100 × Operating profit ÷ Revenue
= 100 × 8,468 ÷ 91,070 = 9.30%
2 Click competitor name to see calculations.
The financial performance over the five-year period exhibits notable fluctuations in key indicators such as operating profit, revenue, and operating profit margin.
- Revenue Trends
- Revenue demonstrated a consistent upward trajectory from 2020 to 2022, increasing from 84,628 million US dollars to 100,338 million US dollars. However, this trend reversed in 2023 when revenue declined to 90,958 million US dollars and slightly increased to 91,070 million US dollars in 2024, indicating a plateau after strong growth in the earlier years.
- Operating Profit Trends
- Operating profit showed substantial growth between 2020 and 2022, rising from 7,684 million US dollars to a peak of 13,094 million US dollars in 2022. This was followed by a significant decrease in the subsequent years, dropping to 9,141 million in 2023 and further to 8,468 million US dollars in 2024. The decline in operating profit in the last two years suggests increased operational challenges or rising costs impacting profitability.
- Operating Profit Margin Trends
- The operating profit margin mirrored the trends observed in operating profit and revenue. It improved from 9.08% in 2020 to a high of 13.17% in 2021, maintaining a similar level in 2022 at 13.05%. However, the margin contracted notably in the following years, falling to 10.05% in 2023 and further to 9.3% in 2024. This contraction highlights a decreasing efficiency in generating operating profit from revenue.
- Overall Summary
- The period from 2020 to 2022 was characterized by robust growth in revenue and strong profitability, with operating profit and margins reaching their highest levels in 2021 and 2022. The subsequent period reveals a downturn in both revenue and profit performance, accompanied by shrinking margins. These patterns suggest potential external or internal factors adversely affecting operational efficiency and profitability in 2023 and 2024.
Net Profit Margin
United Parcel Service Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | 5,782) | 6,708) | 11,548) | 12,890) | 1,343) | |
| Revenue | 91,070) | 90,958) | 100,338) | 97,287) | 84,628) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 6.35% | 7.37% | 11.51% | 13.25% | 1.59% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| FedEx Corp. | 4.94% | 4.41% | 4.09% | 6.23% | 1.86% | |
| Uber Technologies Inc. | 22.41% | 5.06% | -28.68% | -2.84% | -60.76% | |
| Union Pacific Corp. | 27.82% | 26.45% | 28.13% | 29.92% | 27.38% | |
| United Airlines Holdings Inc. | 5.52% | 4.87% | 1.64% | -7.97% | -46.04% | |
| Net Profit Margin, Sector | ||||||
| Transportation | 9.82% | 7.28% | 4.73% | 9.05% | -2.93% | |
| Net Profit Margin, Industry | ||||||
| Industrials | 8.06% | 8.32% | 5.04% | 5.85% | 0.09% | |
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
Net profit margin = 100 × Net income ÷ Revenue
= 100 × 5,782 ÷ 91,070 = 6.35%
2 Click competitor name to see calculations.
- Revenue
- The revenue showed an overall upward trend from 2020 to 2022, increasing from approximately 84.6 billion USD in 2020 to over 100.3 billion USD in 2022. However, in the subsequent years, revenue decreased to about 90.9 billion USD in 2023 and remained almost flat at around 91.1 billion USD in 2024, indicating a slowdown in growth and a stabilization at a lower level compared to the peak in 2022.
- Net Income
- Net income followed a distinct pattern compared to revenue. It experienced a significant increase from 1.3 billion USD in 2020 to nearly 12.9 billion USD in 2021, maintaining a high level with 11.5 billion USD in 2022. Subsequently, net income dropped considerably to 6.7 billion USD in 2023 and declined further to 5.8 billion USD in 2024. This represents a notable contraction in profitability after the peak in 2021, even as revenue stabilized.
- Net Profit Margin
- The net profit margin experienced a similar trajectory as net income. Starting from a low margin of about 1.6% in 2020, it surged to a peak of 13.25% in 2021, then slightly declined to 11.51% in 2022. Following this, the margin decreased significantly to 7.37% in 2023 and further to 6.35% in 2024. This indicates that the company’s efficiency in converting revenue into profit declined after the 2021 peak, aligning with the drop in net income despite relatively stable revenue.
- Overall Analysis
- The data reflects a period of rapid profit growth peaking in 2021, followed by a period of decline in profitability over the last two years ending in 2024. Revenue growth was strong initially but tapered off and slightly decreased in the latter years, suggesting possible market or operational challenges. The decline in net profit margin and net income implies reduced operational efficiency or increased expenses relative to revenue, impacting overall profitability despite maintaining revenue near previous highs.
Return on Equity (ROE)
United Parcel Service Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | 5,782) | 6,708) | 11,548) | 12,890) | 1,343) | |
| Equity for controlling interests | 16,718) | 17,306) | 19,786) | 14,253) | 657) | |
| Profitability Ratio | ||||||
| ROE1 | 34.59% | 38.76% | 58.36% | 90.44% | 204.41% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| FedEx Corp. | 15.70% | 15.23% | 15.34% | 21.64% | 7.03% | |
| Uber Technologies Inc. | 45.72% | 16.77% | -124.54% | -3.43% | -55.18% | |
| Union Pacific Corp. | 39.95% | 43.14% | 57.54% | 46.06% | 31.54% | |
| United Airlines Holdings Inc. | 24.84% | 28.08% | 10.69% | -39.05% | -118.61% | |
| ROE, Sector | ||||||
| Transportation | 31.30% | 27.38% | 19.64% | 30.78% | -10.82% | |
| ROE, Industry | ||||||
| Industrials | 23.51% | 27.70% | 15.38% | 15.38% | 0.24% | |
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
ROE = 100 × Net income ÷ Equity for controlling interests
= 100 × 5,782 ÷ 16,718 = 34.59%
2 Click competitor name to see calculations.
- Net Income
- Net income exhibited a significant increase from 1,343 million USD in 2020 to a peak of 12,890 million USD in 2021. However, following this peak, net income experienced a downward trend over the next three years, declining to 11,548 million USD in 2022, 6,708 million USD in 2023, and further to 5,782 million USD in 2024. This pattern indicates a substantial initial improvement followed by a consistent decrease in profitability.
- Equity for Controlling Interests
- Equity for controlling interests rose dramatically from 657 million USD in 2020 to 14,253 million USD in 2021, followed by continued growth to 19,786 million USD in 2022. However, from 2023 onward, equity decreased to 17,306 million USD and then slightly to 16,718 million USD in 2024. This suggests a period of rapid equity build-up initially, succeeded by a mild contraction in the last two years.
- Return on Equity (ROE)
- ROE showed a sharp decline over the period under review. Starting from an exceptionally high 204.41% in 2020, ROE decreased to 90.44% in 2021, then further dropped to 58.36% in 2022. The decreasing trend continued with ROE reaching 38.76% in 2023 and 34.59% in 2024. Despite being high relative to typical industry standards, ROE's steady decline reflects a diminishing efficiency in generating earnings from equity.
- Summary of Trends
- The data indicates a strong initial improvement in both profitability and equity base during 2020 and 2021, likely reflecting exceptional performance or one-time events. However, from 2022 to 2024, there is a clear pattern of declining net income and ROE, alongside a moderate reduction in equity. This suggests a phase of reduced profitability and efficiency, with the company facing challenges in maintaining its earlier high returns on shareholder equity.
Return on Assets (ROA)
United Parcel Service Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | 5,782) | 6,708) | 11,548) | 12,890) | 1,343) | |
| Total assets | 70,070) | 70,857) | 71,124) | 69,405) | 62,408) | |
| Profitability Ratio | ||||||
| ROA1 | 8.25% | 9.47% | 16.24% | 18.57% | 2.15% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| FedEx Corp. | 4.98% | 4.56% | 4.45% | 6.32% | 1.75% | |
| Uber Technologies Inc. | 19.23% | 4.88% | -28.47% | -1.28% | -20.35% | |
| Union Pacific Corp. | 9.96% | 9.50% | 10.69% | 10.27% | 8.57% | |
| United Airlines Holdings Inc. | 4.25% | 3.68% | 1.09% | -2.88% | -11.87% | |
| ROA, Sector | ||||||
| Transportation | 8.53% | 6.44% | 4.34% | 6.88% | -2.01% | |
| ROA, Industry | ||||||
| Industrials | 5.24% | 5.61% | 3.31% | 3.40% | 0.04% | |
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × 5,782 ÷ 70,070 = 8.25%
2 Click competitor name to see calculations.
- Net Income
- The net income exhibited significant volatility over the observed period. From a relatively modest value of 1,343 million USD in 2020, it experienced a substantial increase, peaking at 12,890 million USD in 2021. This surge was followed by a gradual decline in the subsequent years, dropping to 11,548 million USD in 2022, then further decreasing to 6,708 million USD in 2023, and finally reaching 5,782 million USD in 2024. Despite the initial strong growth, net income showed a downward trend after 2021.
- Total Assets
- Total assets showed moderate growth from 62,408 million USD in 2020 to a high of 71,124 million USD in 2022. After this peak, total assets slightly decreased, recording 70,857 million USD in 2023 and further declining to 70,070 million USD in 2024. This indicates a relatively stable asset base with a minor contraction in recent years.
- Return on Assets (ROA)
- Return on assets followed a pattern consistent with net income fluctuations. It increased significantly from 2.15% in 2020 to a peak of 18.57% in 2021, indicating improved profitability relative to asset base. Subsequently, ROA declined to 16.24% in 2022 and continued to decrease to 9.47% in 2023 and 8.25% in 2024. This decline suggests a reduction in efficiency or profitability relative to assets during the later years, aligning with the decreasing net income trend.