Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Verizon Communications 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).
- Gross Profit Margin
- The gross profit margin demonstrated a slight overall downward trend from 60.09% in 2020 to 56.79% in 2022, followed by a recovery reaching 59.87% in 2024. This pattern indicates some fluctuations in the efficiency of core operations but suggests a relative stabilization and improvement by the end of the observed period.
- Operating Profit Margin
- The operating profit margin experienced variability, initially increasing from 22.45% in 2020 to a peak of 24.29% in 2021. Subsequently, it declined sharply to 17.08% in 2023 before partially recovering to 21.28% in 2024. This trend highlights volatility in operational efficiency or expense management during the period, with a notable dip followed by a partial rebound.
- Net Profit Margin
- The net profit margin rose from 13.88% in 2020 to 16.51% in 2021, then slightly decreased to 15.53% in 2022. A significant drop occurred in 2023 to 8.67%, with a recovery to 12.99% in 2024. This fluctuation signals variability in overall profitability, potentially influenced by non-operating factors or one-time events impacting net income during the middle years.
- Return on Equity (ROE)
- The return on equity followed a downward trajectory over the examined period. It started at 26.24% in 2020, remained close at 26.98% in 2021, then declined to 23.32% in 2022 and sharply dropped to 12.57% in 2023. A moderate recovery to 17.64% was observed in 2024. This indicates decreasing effectiveness in generating shareholder returns, albeit with some improvement after the steep decline.
- Return on Assets (ROA)
- Return on assets mirrored the ROE trend but at lower magnitudes, increasing slightly from 5.62% in 2020 to 6.02% in 2021, declining to 5.6% in 2022, then sharply decreasing to 3.05% in 2023. A partial recovery to 4.55% was visible in 2024. This suggests a reduction in asset utilization efficiency during the period, with signs of improvement toward the end.
Return on Sales
Return on Investment
Gross Profit Margin
Verizon Communications Inc., gross 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) | ||||||
| Gross profit | 80,691) | 79,087) | 77,702) | 77,312) | 77,091) | |
| Operating revenues | 134,788) | 133,974) | 136,835) | 133,613) | 128,292) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 59.87% | 59.03% | 56.79% | 57.86% | 60.09% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| AT&T Inc. | 59.77% | 59.06% | 57.89% | 52.74% | 53.47% | |
| T-Mobile US Inc. | 63.57% | 61.57% | 54.50% | 54.31% | 58.67% | |
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
Gross profit margin = 100 × Gross profit ÷ Operating revenues
= 100 × 80,691 ÷ 134,788 = 59.87%
2 Click competitor name to see calculations.
- Operating Revenues
- The operating revenues exhibited a general upward trend over the observed periods. Starting at $128,292 million in 2020, revenues increased yearly until 2022, reaching $136,835 million. There was a slight decline in 2023 to $133,974 million, followed by a marginal increase to $134,788 million in 2024. This pattern indicates relative stability in revenue generation with minor fluctuations.
- Gross Profit
- Gross profit showed a consistent incremental increase throughout the periods. It grew from $77,091 million in 2020 to $80,691 million in 2024. This steady rise suggests effective cost management or favorable revenue composition contributing to improved profitability at the gross level.
- Gross Profit Margin
- The gross profit margin experienced some fluctuation but maintained a generally high level. It started at 60.09% in 2020, decreased to a low of 56.79% in 2022, and then recovered to 59.87% by 2024. The dip in 2021 and 2022 may indicate rising costs or pricing pressures during that period, while the subsequent increase suggests improvements in cost efficiency or pricing strategies.
- Overall Insights
- The data reflects a company with stable revenue streams and improving gross profitability despite some short-term margin pressures. The rise in gross profit margins post-2022, coupled with incremental gross profit and relatively steady revenues, points to successful adjustments in operations or market conditions favoring the company’s cost structure.
Operating Profit Margin
Verizon Communications Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 28,686) | 22,877) | 30,467) | 32,448) | 28,798) | |
| Operating revenues | 134,788) | 133,974) | 136,835) | 133,613) | 128,292) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 21.28% | 17.08% | 22.27% | 24.29% | 22.45% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| AT&T Inc. | 15.57% | 19.16% | -3.80% | 13.83% | 3.73% | |
| T-Mobile US Inc. | 22.13% | 18.16% | 8.22% | 8.60% | 9.70% | |
| Operating Profit Margin, Sector | ||||||
| Telecommunication Services | 19.42% | 18.09% | 9.62% | 16.38% | 11.36% | |
| Operating Profit Margin, Industry | ||||||
| Communication Services | 25.70% | 22.00% | 16.69% | 22.44% | 16.34% | |
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 income ÷ Operating revenues
= 100 × 28,686 ÷ 134,788 = 21.28%
2 Click competitor name to see calculations.
- Operating Income
- The operating income exhibited a fluctuating trend over the reported periods. It increased from 28,798 million USD in 2020 to a peak of 32,448 million USD in 2021. This was followed by a decline to 30,467 million USD in 2022 and a more pronounced drop to 22,877 million USD in 2023. In 2024, operating income rebounded to 28,686 million USD, nearing but not reaching the earlier peak levels.
- Operating Revenues
- Operating revenues showed a generally upward trend from 2020 to 2022, rising from 128,292 million USD to 136,835 million USD. However, a slight decrease occurred in 2023, with revenues falling to 133,974 million USD before experiencing a modest recovery to 134,788 million USD in 2024. Overall, revenues demonstrated relative stability with minor fluctuations.
- Operating Profit Margin
- The operating profit margin followed a pattern reflective of changes in operating income relative to revenue. It improved from 22.45% in 2020 to a high of 24.29% in 2021, indicating enhanced operational efficiency that year. Subsequently, the margin declined to 22.27% in 2022 and saw a more significant reduction to 17.08% in 2023. By 2024, the margin recovered to 21.28%, suggesting some regain in profitability but not returning fully to the earlier peaks.
- Summary
- The data indicates that while operating revenues maintained moderate growth with some minor regression, operating income and profit margins experienced more pronounced volatility. The peak performance in 2021 was followed by a period of decline, particularly in 2023, which impacted profitability metrics negatively. The rebounds in operating income and profit margin in 2024 suggest a partial recovery in operational performance. These trends highlight fluctuations in efficiency and profitability that may warrant further examination of underlying operational factors.
Net Profit Margin
Verizon Communications 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 attributable to Verizon | 17,506) | 11,614) | 21,256) | 22,065) | 17,801) | |
| Operating revenues | 134,788) | 133,974) | 136,835) | 133,613) | 128,292) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 12.99% | 8.67% | 15.53% | 16.51% | 13.88% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| AT&T Inc. | 8.95% | 11.76% | -7.06% | 11.89% | -3.01% | |
| T-Mobile US Inc. | 13.93% | 10.59% | 3.25% | 3.77% | 4.48% | |
| Net Profit Margin, Sector | ||||||
| Telecommunication Services | 11.75% | 10.25% | 4.54% | 11.81% | 4.26% | |
| Net Profit Margin, Industry | ||||||
| Communication Services | 20.53% | 16.48% | 11.47% | 18.71% | 11.50% | |
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 attributable to Verizon ÷ Operating revenues
= 100 × 17,506 ÷ 134,788 = 12.99%
2 Click competitor name to see calculations.
- Net Income Attributable to Verizon
- The net income shows a general upward trend from 2020 to 2022, increasing from 17,801 million US dollars in 2020 to a peak of 22,065 million in 2021, followed by a slight decline to 21,256 million in 2022. However, a marked decline is observed in 2023, where net income falls significantly to 11,614 million, before partially recovering to 17,506 million in 2024. This pattern indicates volatility in profitability with a notable dip in the year 2023.
- Operating Revenues
- Operating revenues present a gradual increasing trend from 128,292 million US dollars in 2020 to 136,835 million in 2022. A slight decrease occurs in 2023 to 133,974 million, followed by a minor increase to 134,788 million in 2024. Overall, revenues remain relatively stable with moderate fluctuations, indicating steady business operations.
- Net Profit Margin
- The net profit margin reflects profitability efficiency relative to revenues. It rose from 13.88% in 2020 to a peak of 16.51% in 2021, then slightly declined to 15.53% in 2022. A significant drop occurs in 2023, reaching a low of 8.67%, followed by a recovery to 12.99% in 2024. This trend closely mirrors the net income fluctuations, suggesting that factors affecting profitability had a strong impact in the year 2023 but showed signs of improvement in 2024.
Return on Equity (ROE)
Verizon Communications 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 attributable to Verizon | 17,506) | 11,614) | 21,256) | 22,065) | 17,801) | |
| Equity attributable to Verizon | 99,237) | 92,430) | 91,144) | 81,790) | 67,842) | |
| Profitability Ratio | ||||||
| ROE1 | 17.64% | 12.57% | 23.32% | 26.98% | 26.24% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| AT&T Inc. | 10.49% | 13.94% | -8.74% | 12.07% | -3.20% | |
| T-Mobile US Inc. | 18.37% | 12.85% | 3.72% | 4.38% | 4.69% | |
| ROE, Sector | ||||||
| Telecommunication Services | 15.00% | 13.18% | 5.93% | 14.24% | 5.32% | |
| ROE, Industry | ||||||
| Communication Services | 23.08% | 18.63% | 13.31% | 20.33% | 11.51% | |
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 attributable to Verizon ÷ Equity attributable to Verizon
= 100 × 17,506 ÷ 99,237 = 17.64%
2 Click competitor name to see calculations.
- Net Income Attributable to Verizon
- The net income displays a fluctuating trend over the five-year period. Starting at $17,801 million in 2020, it increased to a peak of $22,065 million in 2021. Thereafter, it experienced a decline in 2022 to $21,256 million, followed by a significant drop in 2023 to $11,614 million. The value somewhat recovered in 2024 to $17,506 million but remained below the peak levels of the earlier years.
- Equity Attributable to Verizon
- Equity shows a consistent upward trajectory from $67,842 million in 2020 to $99,237 million in 2024. The growth is steady each year without any observed declines, indicating a strengthening in the company’s equity base throughout the period under review.
- Return on Equity (ROE)
- ROE indicates a declining profitability trend relative to equity over the years. It started at 26.24% in 2020 and slightly increased to 26.98% in 2021. However, it decreased to 23.32% in 2022 and sharply declined to 12.57% in 2023. There was a partial recovery in 2024 to 17.64%, yet the ROE remained significantly lower than the levels seen in 2020 and 2021. This pattern suggests that despite growing equity, the company’s ability to generate profit from its shareholders’ equity diminished notably, particularly after 2021.
- Summary and Insights
- The data reveals a period of strong performance around 2020-2021, with high net income and ROE values indicating effective utilization of equity. From 2022 onward, the company faced challenges leading to a substantial drop in net income and profitability relative to equity by 2023. Although there was some recovery in 2024, profitability measures have not returned to earlier highs. Meanwhile, the steady increase in equity suggests ongoing capital accumulation or retention, which may provide a base for future growth or stability despite recent earnings fluctuations.
Return on Assets (ROA)
Verizon Communications Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Verizon | 17,506) | 11,614) | 21,256) | 22,065) | 17,801) | |
| Total assets | 384,711) | 380,255) | 379,680) | 366,596) | 316,481) | |
| Profitability Ratio | ||||||
| ROA1 | 4.55% | 3.05% | 5.60% | 6.02% | 5.62% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| AT&T Inc. | 2.77% | 3.54% | -2.12% | 3.64% | -0.98% | |
| T-Mobile US Inc. | 5.45% | 4.00% | 1.23% | 1.46% | 1.53% | |
| ROA, Sector | ||||||
| Telecommunication Services | 4.03% | 3.45% | 1.54% | 4.02% | 1.51% | |
| ROA, Industry | ||||||
| Communication Services | 10.19% | 7.83% | 5.43% | 8.37% | 4.70% | |
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 attributable to Verizon ÷ Total assets
= 100 × 17,506 ÷ 384,711 = 4.55%
2 Click competitor name to see calculations.
The analyzed financial data indicates notable fluctuations and trends over the five-year period. The net income attributable to Verizon demonstrates variability, with an initial increase from 17,801 million US dollars in 2020 to a peak of 22,065 million US dollars in 2021, followed by a slight decline to 21,256 million US dollars in 2022. Subsequently, there is a significant drop to 11,614 million US dollars in 2023, before rebounding to 17,506 million US dollars in 2024, though still below the 2021 peak.
Total assets show a steady upward trend throughout the observed years. The asset base increased from 316,481 million US dollars in 2020 to 384,711 million US dollars in 2024, reflecting consistent growth and possibly ongoing investment or asset acquisition activities.
The Return on Assets (ROA) percentage mirrors the fluctuations in net income relative to total assets. ROA improved slightly from 5.62% in 2020 to a high of 6.02% in 2021, then decreased to 5.6% in 2022. A marked decline follows in 2023, with ROA dropping to 3.05%, before partially recovering to 4.55% in 2024. This variation indicates changes in profitability efficiency relative to the asset base.
- Net Income Trends
- Initial growth followed by volatility, including a sharp decline in 2023 and partial recovery in 2024.
- Total Assets Trends
- Consistent year-over-year growth, suggesting expansion or investments increasing the asset base.
- Return on Assets (ROA)
- ROA shows peaks and troughs corresponding to net income variations, indicating fluctuating profitability efficiency against assets.
Overall, the data suggests that while the company has been expanding its assets steadily, its profitability as measured by net income and ROA has experienced significant fluctuations, particularly with a notable drop in 2023 and a moderate recovery in the subsequent year.