CVS Health Corp (CVS)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | -10.24% | -7.01% | -5.53% | -3.79% | -4.19% |
| Operating profit margin | 3.84% | 2.47% | 4.52% | 5.18% | 4.67% |
| Pretax margin | 3.12% | 1.74% | 3.57% | 3.63% | 3.51% |
| Net profit margin | 2.33% | 1.34% | 2.71% | 2.67% | 2.58% |
Looking at the profitability ratios of CVS Health Corp over the past five years, we can observe the following trends:
1. Gross Profit Margin:
The gross profit margin has remained relatively stable around the range of 38% to 40% over the years, indicating that CVS Health has been able to maintain a consistent level of profitability on its products and services after accounting for the cost of goods sold.
2. Operating Profit Margin:
The operating profit margin has shown some fluctuations, with a decrease from 2019 to 2022 followed by a slight increase in 2023. This indicates that while CVS Health has been able to generate profits from its core operations, there have been some challenges impacting profitability at the operating level.
3. Pretax Margin:
The pretax margin also displays variability, with a significant drop in 2022 followed by a slight recovery in 2023. This suggests that CVS Health's profits before accounting for taxes have been subject to fluctuations, potentially influenced by factors such as changes in revenue, expenses, or other operating conditions.
4. Net Profit Margin:
The net profit margin, which represents the bottom line profitability after all expenses have been deducted, has also shown variability over the years. Despite some fluctuations, there has been a gradual upward trend in net profit margin from 2019 to 2023, indicating an improvement in CVS Health's ability to generate profits for its shareholders.
In summary, CVS Health Corp has maintained a stable gross profit margin, while experiencing some fluctuations in operating, pretax, and net profit margins over the past five years. These trends suggest that the company has been managing its profitability effectively, with some ups and downs in operational efficiency and overall financial performance.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 5.50% | 3.48% | 5.66% | 6.03% | 5.39% |
| Return on assets (ROA) | 3.34% | 1.89% | 3.39% | 3.11% | 2.98% |
| Return on total capital | 18.06% | 11.05% | 17.23% | 18.24% | 9.36% |
| Return on equity (ROE) | 10.91% | 6.03% | 10.54% | 10.35% | 10.39% |
CVS Health Corp's profitability ratios demonstrate a mixed performance over the past five years. The operating return on assets (Operating ROA) declined from 7.05% in 2022 to 5.85% in 2023, indicating a decrease in the company's ability to generate operating income relative to its assets. However, the ROA showed improvement, increasing from 1.82% in 2022 to 3.34% in 2023, suggesting a better overall profitability in relation to the total assets.
The return on total capital has also shown fluctuations, with a significant decrease from 13.05% in 2022 to 10.57% in 2023. This ratio reflects the return on both equity and debt capital invested in the business, and the downward trend may indicate challenges in effectively utilizing the company's total capital to generate returns.
On the other hand, the return on equity (ROE) improved notably in 2023 compared to 2022, with a jump from 5.84% to 10.91%. This signals an enhancement in CVS Health Corp's ability to generate profit from the shareholders' equity, which is a positive outcome for investors.
In conclusion, while the profitability ratios of CVS Health Corp have shown some variability over the years, there are notable improvements in ROA and ROE in 2023. However, the decline in Operating ROA and Return on total capital raises concerns regarding the company's operational efficiency and use of capital, which may require further analysis and attention.