Vertex Pharmaceuticals Inc (VRTX)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 72.30% | 75.08% | 76.58% | 76.05% | 74.61% |
| Operating profit margin | -2.12% | 39.09% | 48.60% | 37.10% | 46.55% |
| Pretax margin | 2.26% | 44.68% | 47.75% | 36.41% | 50.80% |
| Net profit margin | -4.87% | 36.92% | 37.48% | 31.23% | 44.20% |
Vertex Pharmaceuticals Inc has shown consistent improvement in its gross profit margin over the years, with an increase from 74.61% in 2020 to 76.05% in 2021, 76.58% in 2022, and then a slight decrease to 75.08% in 2023 and a more significant drop to 72.30% in 2024. This indicates the company's ability to efficiently control the cost of goods sold.
In terms of operating profit margin, Vertex witnessed fluctuations in its margins over the years. The margin decreased from 46.55% in 2020 to 37.10% in 2021, then significantly increased to 48.60% in 2022 before dropping sharply to -2.12% in 2024. The negative operating profit margin in 2024 signifies that the company's operating expenses exceeded its operating income in that year.
Similarly, the pretax margin for Vertex Pharmaceuticals Inc fluctuated over the years, with a gradual decrease from 50.80% in 2020 to 36.41% in 2021, followed by an increase to 47.75% in 2022, and then a slight decline to 44.68% in 2023. However, in 2024, the pretax margin experienced a significant decline to 2.26%, indicating the company faced challenges in generating income before accounting for taxes.
Finally, the net profit margin declined over the years, starting from 44.20% in 2020 to 31.23% in 2021, then recovering to 37.48% in 2022, and remaining relatively stable at 36.92% in 2023. However, there was a substantial decrease to -4.87% in 2024, indicating that Vertex Pharmaceuticals Inc recorded a net loss in that particular year, impacting its overall profitability.
Overall, while Vertex has maintained strong gross profit margins, it faced challenges in controlling operating expenses and generating profits in 2024, as evidenced by the negative operating and net profit margins. This highlights the importance of analyzing all aspects of profitability to assess the company's financial health comprehensively.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | -1.03% | 16.86% | 23.73% | 20.71% | 24.31% |
| Return on assets (ROA) | -2.38% | 15.92% | 18.30% | 17.44% | 23.07% |
| Return on total capital | -1.42% | 21.80% | 30.96% | 27.55% | 36.55% |
| Return on equity (ROE) | -3.26% | 20.59% | 23.88% | 23.19% | 31.22% |
Vertex Pharmaceuticals Inc's profitability ratios demonstrate varying trends over the years.
1. Operating Return on Assets (Operating ROA):
- The Operating ROA declined from 24.31% in 2020 to 20.71% in 2021 but then improved to 23.73% in 2022. However, it decreased to 16.86% in 2023 and significantly turned negative at -1.03% in 2024. This ratio indicates the company's operating profitability relative to its total assets, reflecting efficiency in generating profits from its operational activities.
2. Return on Assets (ROA):
- Similarly, the ROA followed a similar trend, decreasing from 23.07% in 2020 to 17.44% in 2021, showing a slight improvement to 18.30% in 2022. However, it declined to 15.92% in 2023 and sharply dropped to -2.38% in 2024. This ratio evaluates the company's overall ability to generate profits from its assets.
3. Return on Total Capital:
- The Return on Total Capital decreased from 36.55% in 2020 to 27.55% in 2021, then increased to 30.96% in 2022. Subsequently, it decreased to 21.80% in 2023 and notably turned negative at -1.42% in 2024. This ratio assesses the company's profitability concerning all its sources of capital.
4. Return on Equity (ROE):
- The ROE mirrored the trend seen in other ratios, declining from 31.22% in 2020 to 23.19% in 2021. It then improved to 23.88% in 2022. However, it fell to 20.59% in 2023 and significantly dropped to -3.26% in 2024. ROE evaluates the return on shareholder equity invested in the company.
Overall, the profitability ratios of Vertex Pharmaceuticals Inc have shown varying performance, with a general trend of decreasing profitability from 2020 to 2024, culminating in negative returns for the latest year. These trends indicate potential challenges in managing profitability and efficiently utilizing the company's assets to generate returns for investors.