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
United Rentals 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 financial performance between 2018 and 2022 is characterized by a distinct cyclical trend, where a contraction in profitability ratios occurred through 2020, followed by a sustained recovery and expansion phase through 2022.
- Margin Performance
- Gross profit margin experienced a decline from 41.80% in 2018 to a low of 37.32% in 2020, before rebounding to a period peak of 42.91% by 2022. This trajectory is mirrored in the operating profit margin, which decreased from 24.25% to 21.10% during the same initial period and subsequently ascended to 27.76% in 2022. Net profit margin followed a similar pattern, bottoming at 10.43% in 2020 and accelerating to 18.08% by 2022, indicating a significant improvement in the conversion of revenue to actual profit.
- Returns on Capital and Assets
- Return on equity (ROE) exhibited notable volatility, falling from 32.21% in 2018 to a low of 19.58% in 2020. While a recovery began in 2021, the ROE reached 29.81% by 2022, remaining slightly below the 2018 level. Conversely, return on assets (ROA) showed a more consistent upward trajectory following its 2020 low of 4.98%, climbing to a five-year high of 8.70% in 2022, which suggests an increase in the efficiency of asset utilization to generate earnings.
The synchronization of the recovery across all measured ratios suggests that the operational challenges faced in 2020 were followed by a period of strong growth and improved cost management, with 2022 representing the strongest performance in terms of margins and asset returns within the analyzed timeframe.
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Gross Profit Margin
United Rentals 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 millions) | ||||||
| Gross profit | 4,996) | 3,853) | 3,183) | 3,670) | 3,364) | |
| Revenues | 11,642) | 9,716) | 8,530) | 9,351) | 8,047) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 42.91% | 39.66% | 37.32% | 39.25% | 41.80% | |
| 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 ÷ Revenues
= 100 × 4,996 ÷ 11,642 = 42.91%
2 Click competitor name to see calculations.
The financial performance between 2018 and 2022 is characterized by an initial period of margin compression followed by a strong recovery and expansion in overall profitability.
- Revenue and Gross Profit Trajectory
- Revenues experienced an overall upward trend, growing from 8,047 million USD in 2018 to 11,642 million USD in 2022. A temporary contraction occurred in 2020, with revenues dipping to 8,530 million USD, before accelerating sharply in 2021 and 2022. Gross profit followed a similar pattern, reaching a five-year peak of 4,996 million USD in 2022.
- Gross Profit Margin Volatility
- The gross profit margin exhibited a U-shaped trend over the analyzed period. A steady decline was observed from 2018 to 2020, with the margin falling from 41.80% to a low of 37.32%. This indicates a period where the cost of goods sold grew at a faster rate than total revenues.
- Profitability Recovery and Optimization
- A significant reversal in margin trends began in 2021, with the gross profit margin rising to 39.66% and further increasing to 42.91% by the end of 2022. The 2022 margin represents the highest efficiency level in the five-year sequence, surpassing the 2018 baseline and suggesting enhanced pricing power or improved operational cost management relative to the increased revenue scale.
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Operating Profit Margin
United Rentals 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 millions) | ||||||
| Operating income | 3,232) | 2,277) | 1,800) | 2,152) | 1,951) | |
| Revenues | 11,642) | 9,716) | 8,530) | 9,351) | 8,047) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 27.76% | 23.44% | 21.10% | 23.01% | 24.25% | |
| 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 ÷ Revenues
= 100 × 3,232 ÷ 11,642 = 27.76%
2 Click competitor name to see calculations.
The operational performance between 2018 and 2022 is characterized by a temporary contraction followed by a period of accelerated growth in both scale and profitability. A notable dip in financial metrics occurred in 2020, succeeded by a robust recovery that culminated in record highs across all analyzed metrics by the end of 2022.
- Revenue and Operating Income Trends
- Revenues exhibited an overall upward trajectory, increasing from US$ 8,047 million in 2018 to US$ 11,642 million in 2022. A temporary decline was observed in 2020, where revenues fell to US$ 8,530 million. Operating income mirrored this pattern, declining from US$ 2,152 million in 2019 to US$ 1,800 million in 2020, before experiencing a sharp increase to US$ 3,232 million by December 31, 2022.
- Operating Profit Margin Fluctuations
- The operating profit margin experienced a steady decline from 24.25% in 2018 to a period low of 21.10% in 2020. This downward trend was reversed in 2021 as the margin climbed back to 23.44%. A significant expansion occurred in 2022, with the margin reaching 27.76%, marking the highest efficiency level within the five-year period.
- Operational Efficiency and Scaling
- The data indicates a strong positive correlation between revenue growth and margin expansion in the final two years of the period. The increase in the operating profit margin from 21.10% in 2020 to 27.76% in 2022 suggests that operating income grew at a faster rate than revenues, reflecting improved cost management, increased pricing power, or favorable economies of scale.
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Net Profit Margin
United Rentals 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 millions) | ||||||
| Net income | 2,105) | 1,386) | 890) | 1,174) | 1,096) | |
| Revenues | 11,642) | 9,716) | 8,530) | 9,351) | 8,047) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 18.08% | 14.27% | 10.43% | 12.55% | 13.62% | |
| 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 ÷ Revenues
= 100 × 2,105 ÷ 11,642 = 18.08%
2 Click competitor name to see calculations.
The financial performance between 2018 and 2022 is characterized by a period of contraction followed by a significant acceleration in both revenue and profitability. A notable dip occurred in 2020, which served as a pivot point for a subsequent and rapid expansion in operational efficiency and net earnings.
- Net Profit Margin Trend
- A downward trajectory is observed from 2018 to 2020, with the net profit margin declining from 13.62% to a five-year low of 10.43%. This trend reversed sharply starting in 2021, as the margin climbed to 14.27% and continued to expand significantly to reach 18.08% by December 31, 2022. This represents a substantial improvement in the percentage of revenue converted into actual profit.
- Revenue and Net Income Correlation
- Revenues exhibited a V-shaped recovery, falling from 9,351 million US$ in 2019 to 8,530 million US$ in 2020, before surging to 11,642 million US$ by 2022. Net income followed a similar pattern but with higher volatility; it decreased to 890 million US$ in 2020 and subsequently grew to 2,105 million US$ in 2022. The acceleration of net income outperformed revenue growth between 2021 and 2022, contributing to the marked expansion of the profit margin.
- Profitability Analysis
- The period from 2021 to 2022 shows a high degree of operating leverage. While revenues increased by approximately 19.9% during this interval, net income increased by approximately 52.1%. This discrepancy indicates that costs did not scale linearly with revenue, resulting in a significant enhancement of the bottom-line margin.
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Return on Equity (ROE)
United Rentals 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 millions) | ||||||
| Net income | 2,105) | 1,386) | 890) | 1,174) | 1,096) | |
| Stockholders’ equity | 7,062) | 5,991) | 4,545) | 3,830) | 3,403) | |
| Profitability Ratio | ||||||
| ROE1 | 29.81% | 23.13% | 19.58% | 30.65% | 32.21% | |
| 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 ÷ Stockholders’ equity
= 100 × 2,105 ÷ 7,062 = 29.81%
2 Click competitor name to see calculations.
The Return on Equity (ROE) exhibited a V-shaped trajectory between 2018 and 2022, characterized by a significant contraction in 2020 followed by a robust recovery. While the ROE began the period at 32.21% in 2018, it reached a low of 19.58% in 2020 before climbing back to 29.81% by the end of 2022.
- Net Income Performance
- Net income showed volatility, declining from 1,174 million USD in 2019 to 890 million USD in 2020. However, a sharp upward trend followed, with earnings increasing to 1,386 million USD in 2021 and peaking at 2,105 million USD in 2022, representing a significant acceleration in profitability.
- Stockholders' Equity Expansion
- Equity grew consistently and monotonically throughout the five-year period, increasing from 3,403 million USD in 2018 to 7,062 million USD in 2022. This steady expansion of the capital base indicates a continuous increase in the denominator of the ROE calculation.
- ROE Dynamics and Efficiency
- The decline in ROE observed in 2020 resulted from the simultaneous occurrence of decreased net income and increased stockholders' equity. The subsequent recovery in 2021 and 2022 demonstrates that net income growth began to outpace the expansion of the equity base, effectively restoring the company's capacity to generate high returns on shareholders' capital.
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Return on Assets (ROA)
United Rentals 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 millions) | ||||||
| Net income | 2,105) | 1,386) | 890) | 1,174) | 1,096) | |
| Total assets | 24,183) | 20,292) | 17,868) | 18,970) | 18,133) | |
| Profitability Ratio | ||||||
| ROA1 | 8.70% | 6.83% | 4.98% | 6.19% | 6.04% | |
| 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 ÷ Total assets
= 100 × 2,105 ÷ 24,183 = 8.70%
2 Click competitor name to see calculations.
The financial performance over the five-year period is characterized by a temporary contraction in profitability followed by a period of accelerated growth and enhanced asset efficiency. While a dip in performance occurred in 2020, the subsequent recovery led to a significant peak in both absolute earnings and the efficiency of asset utilization by the end of 2022.
- Net Income Trends
- Net income experienced a period of volatility, rising slightly from US$ 1,096 million in 2018 to US$ 1,174 million in 2019 before declining to a period low of US$ 890 million in 2020. A robust recovery followed, with net income increasing to US$ 1,386 million in 2021 and reaching US$ 2,105 million by December 31, 2022.
- Asset Base Evolution
- Total assets remained relatively stable from 2018 through 2020, with a slight decrease observed in 2020 to US$ 17,868 million. Following this stabilization, a period of aggressive expansion occurred, with total assets increasing to US$ 20,292 million in 2021 and further climbing to US$ 24,183 million in 2022.
- Return on Assets (ROA) Analysis
- The ROA trend mirrors the trajectory of net income, starting at 6.04% in 2018 and dipping to 4.98% in 2020. However, the period from 2021 to 2022 shows a marked improvement in asset productivity, with the ROA rising to 6.83% and then to 8.70%. This indicates that the growth in net income significantly outpaced the expansion of the asset base, resulting in a higher rate of return for every dollar of assets deployed.
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