Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Income Statement
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
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Profitability Ratios (Summary)
Verizon Communications Inc., profitability ratios
Based on: 10-K (reporting date: 2025-12-31), 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).
The profitability metrics demonstrate a period of fluctuation followed by stabilization. Initial values experienced declines between 2021 and 2023, with a subsequent recovery and leveling off through 2025. This pattern is evident across all reported ratios, though the magnitude of change varies.
- Gross Profit Margin
- The gross profit margin exhibited a slight decrease from 57.86% in 2021 to 56.79% in 2022. A recovery was then observed, peaking at 59.87% in 2024 before settling at 58.92% in 2025. This suggests a strengthening and then stabilization of the company’s ability to control production costs relative to revenue.
- Operating Profit Margin
- The operating profit margin experienced a more pronounced decline, falling from 24.29% in 2021 to 17.08% in 2023. A significant rebound occurred in 2024, reaching 21.28%, and remained relatively stable at 21.17% in 2025. This indicates a notable improvement in operational efficiency and cost management following the low point in 2023.
- Net Profit Margin
- The net profit margin mirrored the trend of the operating margin, with a substantial decrease from 16.51% in 2021 to 8.67% in 2023. A recovery began in 2024, reaching 12.99%, and continued to 12.43% in 2025. This suggests that improvements in profitability are translating to the bottom line, though not fully recovering to prior levels.
- Return on Equity (ROE)
- Return on equity followed a similar pattern, decreasing from 26.98% in 2021 to 12.57% in 2023. A recovery was seen in 2024 (17.64%) and 2025 (16.44%), indicating improved profitability relative to shareholder equity, but still below the initial value.
- Return on Assets (ROA)
- Return on assets also declined from 6.02% in 2021 to 3.05% in 2023, before increasing to 4.55% in 2024 and 4.25% in 2025. This demonstrates an improvement in the efficiency with which assets are used to generate profit, though it remains lower than the initial level.
Overall, the period between 2021 and 2023 appears to have been challenging for profitability. However, the subsequent years demonstrate a positive trend towards recovery and stabilization, suggesting successful implementation of corrective measures or favorable market conditions. The leveling off of these ratios in 2025 may indicate a new equilibrium or the beginning of a slower growth phase.
Return on Sales
Return on Investment
Gross Profit Margin
Verizon Communications Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Operating revenues | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| AT&T Inc. | ||||||
| T-Mobile US Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
Gross profit margin = 100 × Gross profit ÷ Operating revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The gross profit margin exhibited fluctuations over the five-year period. While gross profit demonstrated a consistent upward trajectory, operating revenues experienced some volatility, influencing the overall margin performance.
- Gross Profit Margin Trend
- The gross profit margin began at 57.86% in 2021. A decrease was observed in 2022, with the margin falling to 56.79%. Subsequently, the margin increased to 59.03% in 2023 and continued to rise, reaching 59.87% in 2024. A slight decline to 58.92% was noted in 2025.
Gross profit increased each year, moving from US$77,312 million in 2021 to US$81,426 million in 2025. However, operating revenues did not follow the same pattern. Revenues increased from US$133,613 million in 2021 to US$136,835 million in 2022, then decreased to US$133,974 million in 2023. Revenues then showed a modest increase to US$134,788 million in 2024, followed by a more substantial increase to US$138,191 million in 2025.
- Relationship between Gross Profit and Operating Revenues
- The increase in gross profit margin in 2023 and 2024 coincided with a period where the growth in gross profit outpaced the growth in operating revenues. The slight decrease in gross profit margin in 2025 occurred despite continued growth in gross profit, as operating revenues experienced a larger percentage increase.
The observed fluctuations suggest a dynamic relationship between the cost of goods sold and revenue generation. The company appears to have effectively managed its cost of goods sold relative to revenue, particularly in 2023 and 2024, leading to margin expansion. The 2025 results indicate that while profitability remains strong, revenue growth is a key factor influencing margin performance.
Operating Profit Margin
Verizon Communications Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | ||||||
| Operating revenues | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| AT&T Inc. | ||||||
| T-Mobile US Inc. | ||||||
| Operating Profit Margin, Sector | ||||||
| Telecommunication Services | ||||||
| Operating Profit Margin, Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
Operating profit margin = 100 × Operating income ÷ Operating revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The operating profit margin exhibited fluctuations over the five-year period. Initial values demonstrated a strong profitability position, which subsequently experienced a decline before showing signs of recovery.
- Operating Profit Margin Trend
- The operating profit margin began at 24.29% in 2021. A decrease was observed in 2022, with the margin falling to 22.27%. This downward trend continued into 2023, reaching a low of 17.08%. A notable recovery occurred in 2024, as the margin increased to 21.28%, and this improvement persisted into 2025, with a margin of 21.17%.
The decline in operating profit margin between 2021 and 2023 suggests increasing costs relative to revenue, or potentially pricing pressures. The subsequent increase in 2024 and 2025 indicates successful cost management strategies, revenue growth, or a combination of both. While the margin did not return to the 2021 level, the stabilization around 21% in the most recent periods suggests a potential plateau or a new normal for profitability.
- Relationship to Operating Income and Revenue
- Operating income decreased from US$32,448 million in 2021 to US$30,467 million in 2022, then experienced a more substantial decline to US$22,877 million in 2023. The subsequent increases to US$28,686 million in 2024 and US$29,259 million in 2025 align with the recovery in the operating profit margin. Operating revenues showed a modest increase from 2021 to 2022, followed by a decrease in 2023, and then a gradual increase in 2024 and 2025. The revenue trend, combined with the operating income fluctuations, explains the observed changes in the operating profit margin.
The recent stabilization of the operating profit margin, coupled with increasing operating income and revenues, suggests a positive trajectory. Continued monitoring of these metrics will be crucial to assess the sustainability of this improvement.
Net Profit Margin
Verizon Communications Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Verizon | ||||||
| Operating revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| AT&T Inc. | ||||||
| T-Mobile US Inc. | ||||||
| Net Profit Margin, Sector | ||||||
| Telecommunication Services | ||||||
| Net Profit Margin, Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
Net profit margin = 100 × Net income attributable to Verizon ÷ Operating revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The net profit margin exhibited considerable fluctuation over the five-year period. Initial values demonstrated a strong profitability position, which subsequently experienced a significant decline before stabilizing in later years.
- Net Profit Margin Trend
- In 2021, the net profit margin stood at 16.51%. A moderate decrease was observed in 2022, with the margin declining to 15.53%. A substantial reduction occurred in 2023, falling to 8.67%. This represents the lowest margin observed within the analyzed timeframe. A recovery was then noted in 2024, with the margin increasing to 12.99%, and continued into 2025, reaching 12.43%.
The decline in net profit margin from 2021 to 2023 coincided with a relatively stable revenue base, suggesting that changes in profitability were primarily driven by fluctuations in net income attributable to Verizon. The subsequent increase in margin from 2023 to 2025, despite only modest revenue growth, indicates improved efficiency in converting revenue into profit during those years.
- Relationship to Net Income
- Net income attributable to Verizon decreased from US$22,065 million in 2021 to US$21,256 million in 2022, then experienced a more dramatic decrease to US$11,614 million in 2023. This decline directly contributed to the significant drop in net profit margin observed in 2023. Net income then increased to US$17,506 million in 2024 and remained relatively stable at US$17,174 million in 2025, supporting the partial recovery in net profit margin.
Operating revenues demonstrated a generally upward trend, increasing from US$133,613 million in 2021 to US$138,191 million in 2025. However, revenue growth was not substantial enough to offset the decline in net income in 2023, resulting in the lowest net profit margin of the period. The moderate revenue increases in 2024 and 2025, coupled with improved net income, contributed to the stabilization of the net profit margin.
Return on Equity (ROE)
Verizon Communications Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Verizon | ||||||
| Equity attributable to Verizon | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| AT&T Inc. | ||||||
| T-Mobile US Inc. | ||||||
| ROE, Sector | ||||||
| Telecommunication Services | ||||||
| ROE, Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
ROE = 100 × Net income attributable to Verizon ÷ Equity attributable to Verizon
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Equity (ROE) exhibited considerable fluctuation over the five-year period. Initial values were strong, followed by a significant decline, and then a partial recovery. Net income attributable to Verizon and equity attributable to Verizon both generally increased over the period, but their combined effect on ROE was not consistent.
- ROE Trend
- ROE began at 26.98% in 2021, representing a high level of profitability relative to shareholder equity. A decrease was observed in 2022, with ROE falling to 23.32%. This downward trend accelerated substantially in 2023, with ROE declining to 12.57%, the lowest value in the observed period. A recovery began in 2024, with ROE increasing to 17.64%, and continued modestly into 2025, reaching 16.44%.
- Net Income Impact
- Net income attributable to Verizon decreased from US$22,065 million in 2021 to US$21,256 million in 2022, contributing to the initial ROE decline. A more substantial decrease in net income to US$11,614 million in 2023 was the primary driver of the significant ROE drop that year. Subsequent increases in net income to US$17,506 million in 2024 and US$17,174 million in 2025 partially offset the impact of increasing equity and contributed to the ROE recovery.
- Equity Impact
- Equity attributable to Verizon consistently increased throughout the period, rising from US$81,790 million in 2021 to US$104,460 million in 2025. This consistent growth in equity, while generally positive, exerted downward pressure on ROE, particularly in 2023 when net income was at its lowest. The increasing equity base required a larger net income to maintain the same ROE percentage.
The interplay between net income and equity demonstrates that ROE is sensitive to changes in both components. While equity growth is generally desirable, maintaining profitability is crucial for sustaining a strong ROE. The observed fluctuations suggest a period of volatility in profitability, impacting the return generated for shareholders.
Return on Assets (ROA)
Verizon Communications Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Verizon | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| AT&T Inc. | ||||||
| T-Mobile US Inc. | ||||||
| ROA, Sector | ||||||
| Telecommunication Services | ||||||
| ROA, Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
ROA = 100 × Net income attributable to Verizon ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibited fluctuating performance over the five-year period. Initial values demonstrated a relatively strong ability to generate earnings from its asset base, followed by a period of decline and subsequent partial recovery.
- Overall Trend
- The ROA began at 6.02% in 2021, decreased to a low of 3.05% in 2023, and then showed improvement, reaching 4.55% in 2024 and 4.25% in 2025. This indicates a period of diminished profitability relative to asset investment, followed by a recovery, though not to the initial level.
- Year-over-Year Changes
- From 2021 to 2022, the ROA decreased by 0.42 percentage points, from 6.02% to 5.60%. A more substantial decline occurred between 2022 and 2023, with the ROA falling by 2.55 percentage points to 3.05%. The period from 2023 to 2024 saw a significant increase of 1.50 percentage points, bringing the ROA to 4.55%. A slight decrease of 0.30 percentage points was observed from 2024 to 2025, resulting in a final ROA of 4.25%.
- Relationship to Net Income and Total Assets
- The decrease in ROA from 2021 to 2023 largely corresponds with a decrease in net income attributable to Verizon. While total assets remained relatively stable between 2021 and 2023, the substantial reduction in net income significantly impacted the ROA. The subsequent increase in ROA from 2023 to 2024 is attributable to a notable increase in net income, despite a continued rise in total assets. The slight decrease in ROA from 2024 to 2025 occurred alongside a modest decrease in net income and a further increase in total assets.
In summary, the ROA trend suggests a period of operational or economic challenges impacting profitability, followed by a partial rebound. Continued monitoring of both net income and asset utilization will be crucial to assess the sustainability of the recent improvement.