RXO Inc. (RXO)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 15.30% | 16.76% | 24.44% | 21.50% | 23.50% |
| Operating profit margin | -1.23% | 0.99% | 2.56% | 4.09% | 2.38% |
| Pretax margin | -6.68% | 0.10% | 2.48% | 4.07% | 1.70% |
| Net profit margin | -0.01% | 0.10% | 1.92% | 3.20% | 1.28% |
The profitability ratios of RXO Inc. have shown fluctuating trends over the years. The gross profit margin, which indicates the percentage of revenue retained after accounting for the cost of goods sold, has decreased from 23.50% in 2020 to 15.30% in 2024. This decline may reflect challenges in managing production costs or pricing strategies.
The operating profit margin, a measure of operational efficiency, has also displayed a downward trend, dropping from 2.38% in 2020 to -1.23% in 2024. This suggests that the company's operating expenses relative to revenue have become less favorable over time, potentially indicating inefficiencies in key business functions.
Similarly, the pretax margin, showcasing the percentage of each dollar of revenue that translates into pre-tax profit, has decreased significantly from 1.70% in 2020 to -6.68% in 2024. This dramatic decline may signal broader financial difficulties or challenges such as increased taxes or non-operating losses impacting the bottom line.
Finally, the net profit margin, reflecting the portion of revenue that translates into net profit, has also seen a decline from 1.28% in 2020 to -0.01% in 2024. This indicates that the company's overall profitability after accounting for all expenses and taxes has diminished, potentially raising concerns about the company's long-term financial sustainability.
In summary, RXO Inc.'s profitability ratios have shown a deteriorating performance over the years, suggesting potential issues with cost management, operational efficiency, and overall profitability. Further analysis of the company's financial statements and operational strategies may be necessary to address these concerns and improve its financial health.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | -1.64% | 2.14% | 6.04% | 9.28% | 4.28% |
| Return on assets (ROA) | -0.01% | 0.22% | 4.51% | 7.25% | 2.30% |
| Return on total capital | -17.00% | 6.06% | 20.88% | 18.32% | 7.87% |
| Return on equity (ROE) | -0.02% | 0.67% | 15.62% | 14.02% | 4.03% |
Based on the profitability ratios of RXO Inc. over the last five years, the company's performance has shown fluctuations.
1. Operating return on assets (Operating ROA) has varied across the years, with a notable increase from 2020 to 2021, followed by a decrease in subsequent years. The company achieved the highest Operating ROA in 2021 at 9.28%, indicating an efficient utilization of its assets to generate operating profits.
2. Return on assets (ROA) also exhibited fluctuations, peaking in 2021 and then declining in the following years. This ratio measures the company's overall profitability in relation to its total assets. The negative ROA in 2024 (-0.01%) implies that the company faced challenges in generating profits from its assets.
3. Return on total capital indicates how well the company generates returns in relation to all the capital invested in the business. RXO Inc. experienced significant variations in this ratio, with a substantial drop to -17.00% in 2024, suggesting a concerning situation where the company's capital investments did not yield positive returns.
4. Return on equity (ROE) measures the profitability of the company from the perspective of its equity holders. RXO Inc.'s ROE fluctuated over the years, with a notable increase in 2021 followed by a sharp decline in 2024. The negative ROE in 2024 (-0.02%) indicates that the company was unable to generate positive returns for its equity shareholders during that year.
In summary, while RXO Inc. demonstrated periods of improved profitability in certain years, the overall trend shows inconsistency and a recent decline in profitability. It is crucial for the company to assess its asset utilization, capital efficiency, and equity returns to address the challenges affecting its profitability ratios.