Laboratory Corporation of America Holdings (LH)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 27.67% | 31.26% | 34.89% | 35.43% | 28.15% |
| Operating profit margin | 5.97% | 12.11% | 20.22% | 17.49% | 11.51% |
| Pretax margin | 4.99% | 13.33% | 19.38% | 15.87% | 9.55% |
| Net profit margin | 3.44% | 10.78% | 14.75% | 11.13% | 7.13% |
The table presents the profitability ratios of Laboratory Corp. Of America Holdings over the past five years. The gross profit margin, which indicates the percentage of revenue retained after accounting for the cost of goods sold, has shown a declining trend from 2019 to 2023, dropping from 28.15% to 27.67%.
The operating profit margin, representing the proportion of revenue remaining after deducting operating expenses, also exhibits a decreasing pattern over the same period, decreasing from 11.98% in 2019 to 9.24% in 2023. This suggests that the company's operational efficiency in generating profits from its core business activities has weakened.
The pretax margin, reflecting the percentage of revenue remaining after accounting for all operating expenses and before tax deductions, has been fluctuating during the period under review. It peaked at 19.39% in 2021 but decreased to 4.68% in 2023, indicating potential challenges in controlling expenses and generating pre-tax profits consistently.
Lastly, the net profit margin, which measures the portion of revenue remaining after all expenses, including taxes, are deducted, has also shown a downward trajectory from 7.13% in 2019 to 3.44% in 2023. This indicates a declining trend in the company's ability to convert revenue into bottom-line profits over the years.
Overall, the declining trend in these profitability ratios signals potential challenges in managing costs, operational efficiency, and ultimately, bottom-line profitability for Laboratory Corp. Of America Holdings. Further analysis of the company's financial performance and strategic initiatives may be needed to address these concerns.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 4.34% | 7.13% | 15.99% | 12.18% | 7.37% |
| Return on assets (ROA) | 2.50% | 6.35% | 11.66% | 7.75% | 4.56% |
| Return on total capital | 6.76% | 11.64% | 21.27% | 16.33% | 10.01% |
| Return on equity (ROE) | 5.31% | 12.67% | 23.14% | 16.49% | 10.78% |
Laboratory Corp. Of America Holdings' profitability ratios demonstrate fluctuations over the past five years. The Operating return on assets (Operating ROA) has shown a decreasing trend from 2019 to 2023, with a notable drop from 16.20% in 2021 to 6.72% in 2023. This indicates a decline in the company's ability to generate operating income from its total assets.
Similarly, the Return on assets (ROA) has also experienced variability, with a significant jump from 7.75% in 2020 to 11.66% in 2021 followed by a decrease to 2.50% in 2023. This suggests a fluctuating profitability pattern in relation to the company's total assets.
The Return on total capital displays a somewhat stable trend, showing a peak of 21.09% in 2021 and a low of 8.62% in 2023. This ratio reflects the company's efficiency in generating returns from both debt and equity capital.
Lastly, the Return on equity (ROE) has exhibited a similar pattern, with peaks in 2021 and declines in subsequent years. The ROE dropped from 23.14% in 2021 to 5.31% in 2023, indicating a reduction in the profitability of the company with respect to shareholders' equity.
Overall, the fluctuating nature of Laboratory Corp. Of America Holdings' profitability ratios suggests varying levels of efficiency in generating profits from assets, total capital, and equity over the past five years. Further analysis may be required to understand the underlying factors driving these trends and to assess the company's future profitability prospects.