RXO Inc. (RXO)
Profitability ratios
Return on sales
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | |
|---|---|---|---|
| Gross profit margin | 8.69% | 9.09% | 9.60% |
| Operating profit margin | 0.99% | 0.59% | 0.78% |
| Pretax margin | 0.10% | -0.15% | 0.28% |
| Net profit margin | 0.10% | -0.05% | 0.28% |
The profitability ratios of RXO Inc. show fluctuating trends over the past three quarters.
- Gross profit margin has been declining from 9.60% in June 2023 to 8.69% in December 2023, indicating a decrease in the percentage of revenue retained after accounting for the cost of goods sold.
- Operating profit margin has been volatile, with a slight increase in September 2023 but a decrease in December 2023, reflecting the company's ability to generate profits from its core operations.
- Pretax margin was negative in September 2023 but improved to 0.10% in December 2023, suggesting the company's ability to control operating expenses and interest costs.
- Net profit margin was negative in September 2023 but turned positive in December 2023, indicating the company's ability to generate profits after considering all expenses, including taxes.
Overall, RXO Inc. needs to focus on improving its gross profit margin and maintaining a consistent operating profit margin to enhance its overall profitability in the future.
Return on investment
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | |
|---|---|---|---|
| Operating return on assets (Operating ROA) | 2.14% | 1.23% | 1.73% |
| Return on assets (ROA) | 0.22% | -0.10% | 0.63% |
| Return on total capital | 6.57% | 4.07% | 5.60% |
| Return on equity (ROE) | 0.67% | -0.34% | 2.04% |
RXO Inc.'s profitability ratios show a mixed performance over the past three quarters. The Operating ROA, which measures the company's operating income generated per dollar of assets, improved steadily from 1.23% in September 2023 to 2.14% in December 2023. This indicates that RXO Inc. became more efficient in utilizing its assets to generate operating profits during this period.
However, the overall ROA, which considers both operating and non-operating income, remains relatively low and even negative in September 2023, suggesting that the company struggled to generate profits from its total assets. The negative ROA in September 2023 could indicate a period of unprofitability or inefficiency in asset utilization during that quarter.
In terms of return on total capital (ROTC), which reflects the company's profitability in relation to its total invested capital, RXO Inc. demonstrated a positive trend with an increase from 4.07% in September 2023 to 6.57% in December 2023. This suggests that the company effectively generated returns for both debt and equity holders over the analyzed period.
The return on equity (ROE), which measures the return earned on shareholders' equity, also improved over the quarters from a negative figure in September 2023 to 2.04% in December 2023. This indicates that the company's profitability relative to shareholders' equity strengthened over time.
In conclusion, while some profitability metrics like Operating ROA and ROTC showed improvement, RXO Inc. still faces challenges in generating profits from its total assets as indicated by the overall ROA performance. Continued monitoring and potential strategic adjustments may be necessary to sustain and enhance the company's overall profitability.