Upbound Group Inc. (UPBD)
Operating return on assets (Operating ROA)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Operating income | US$ in thousands | 162,865 | 148,538 | 280,539 | 237,336 | 253,859 |
| Total assets | US$ in thousands | 2,721,430 | 2,763,620 | 2,993,330 | 1,750,980 | 1,582,800 |
| Operating ROA | 5.98% | 5.37% | 9.37% | 13.55% | 16.04% |
December 31, 2023 calculation
Operating ROA = Operating income ÷ Total assets
= $162,865K ÷ $2,721,430K
= 5.98%
The operating return on assets (ROA) of Upbound Group Inc. has shown a declining trend over the past five years, decreasing from 16.04% in 2019 to 5.98% in 2023. This indicates that the company's ability to generate operating income from its assets has weakened over this period.
The significant drop in operating ROA from 2019 to 2020, where it fell from 16.04% to 13.55%, suggests a notable decrease in the efficiency of utilizing assets to generate operating profits. This trend continued in subsequent years, with further declines to 9.37% in 2021 and 5.37% in 2022, before reaching 5.98% in 2023.
The decreasing operating ROA could be attributed to various factors such as a decrease in operating income, inefficient asset utilization, or an increase in total assets without a proportionate increase in operating income. It may indicate challenges in the company's operational efficiency and profitability.
Management should closely monitor this trend and undertake measures to improve asset utilization, enhance operational performance, and boost profitability to reverse the declining trend in operating ROA. By addressing the underlying issues affecting operating ROA, Upbound Group Inc. can potentially improve its financial performance and create long-term value for its stakeholders.
Peer comparison
Dec 31, 2023