Trex Company Inc (TREX)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 42.28% | 41.44% | 37.04% | 38.47% | 40.76% |
| Operating profit margin | 26.61% | 25.30% | 22.62% | 23.01% | 26.49% |
| Pretax margin | 26.61% | 25.30% | 22.63% | 23.01% | 26.61% |
| Net profit margin | 19.71% | 18.81% | 16.93% | 17.44% | 19.92% |
Trex Company Inc's profitability ratios show a mixed performance over the years.
1. Gross Profit Margin: The company experienced a slight decrease in its gross profit margin from 40.76% in 2020 to 37.04% in 2022, indicating a reduction in the percentage of revenue retained after accounting for the cost of goods sold. However, there was a subsequent improvement in 2023 and 2024, with margins rising to 41.44% and 42.28% respectively, showcasing an increase in efficiency in managing production costs.
2. Operating Profit Margin: The operating profit margin of Trex Company Inc declined from 26.49% in 2020 to 22.62% in 2022, reflecting a decrease in profitability from core operations. However, there was a recovery in 2023 and 2024, with margins reaching 25.30% and 26.61% respectively, suggesting enhanced efficiency in managing operating expenses.
3. Pretax Margin: The pretax margin, which highlights the company's profitability before taxes, displayed a similar trend to the operating profit margin, declining from 26.61% in 2020 to 22.63% in 2022. This was followed by improvements in 2023 and 2024, with margins increasing to 25.30% and 26.61% respectively, indicating better overall financial performance.
4. Net Profit Margin: The net profit margin, which represents the percentage of revenue that translates into net income, decreased from 19.92% in 2020 to 16.93% in 2022. However, there was a recovery in 2023 and 2024, with margins rising to 18.81% and 19.71% respectively. This indicates an improvement in the company's ability to generate profits after accounting for all expenses and taxes.
In summary, while Trex Company Inc faced some challenges in maintaining profitability ratios in 2022, there was a notable recovery in 2023 and 2024, with improving margins across the board. This suggests that the company made efforts to enhance cost management and operational efficiency, ultimately leading to a better bottom line.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 23.08% | 29.61% | 26.43% | 29.92% | 30.32% |
| Return on assets (ROA) | 17.10% | 22.02% | 19.77% | 22.68% | 22.79% |
| Return on total capital | 35.96% | 38.54% | 47.60% | 37.98% | 39.70% |
| Return on equity (ROE) | 26.63% | 28.66% | 35.62% | 28.79% | 29.84% |
Trex Company Inc's profitability ratios exhibit a mixed performance over the period from December 31, 2020, to December 31, 2024.
1. Operating return on assets (Operating ROA): This ratio, which measures operational efficiency in generating profits from the company's assets, declined from 30.32% in 2020 to 23.08% in 2024. The decrease indicates potential challenges in maintaining profitability from core operations over the years.
2. Return on assets (ROA): The ROA, reflecting the overall efficiency in generating profits from all assets, also showed a downward trend, decreasing from 22.79% in 2020 to 17.10% in 2024. This indicates a reduction in the company's overall ability to generate earnings relative to its total assets.
3. Return on total capital: This ratio, which evaluates the return generated from all sources of capital, decreased from 39.70% in 2020 to 35.96% in 2024. The declining trend may suggest inefficiencies in utilizing the total capital invested in the company's operations.
4. Return on equity (ROE): The ROE, which measures the return on shareholders' equity, fluctuated over the years, reaching its peak at 35.62% in 2022. However, it declined to 26.63% by the end of 2024, indicating a decrease in the profitability available for shareholders relative to their equity investment.
In conclusion, Trex Company Inc's profitability ratios show a general decline or fluctuation over the period under review, highlighting potential challenges in maintaining and improving profitability from both operational and capital perspectives. Further analysis and examination of the company's financial performance and operations may be needed to identify the underlying reasons for these trends and to formulate strategies for improvement.