Verizon Communications Inc (VZ)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 60.35% | 56.77% | 66.99% | 69.10% | 61.85% |
| Operating profit margin | 21.28% | 17.08% | 22.27% | 24.29% | 22.45% |
| Pretax margin | 16.72% | 12.32% | 20.30% | 21.60% | 18.26% |
| Net profit margin | 12.99% | 8.67% | 15.53% | 16.51% | 13.88% |
Verizon Communications Inc has shown fluctuating profitability margins over the past five years. The gross profit margin, which indicates the percentage of revenue remaining after deducting the cost of goods sold, has ranged from a low of 56.77% in 2023 to a high of 69.10% in 2021.
In terms of operating profit margin, which reflects the percentage of revenue that translates to operating income after accounting for operating expenses, Verizon's performance has ranged from 17.08% in 2023 to 24.29% in 2021.
The pretax margin, representing the percentage of revenue left after accounting for all expenses except taxes, has fluctuated, with the lowest figure of 12.32% in 2023 and the highest of 21.60% in 2021.
Lastly, the net profit margin, indicating the percentage of revenue that translates to net income after accounting for all expenses including taxes, shows a similar trend, ranging from a low of 8.67% in 2023 to a high of 16.51% in 2021.
Overall, while Verizon's profitability margins have shown variability, there seems to be a general trend of improvement in margins from 2020 to 2021, followed by a slight decline in 2023 and a partial recovery in 2024. Investing considerations should take into account the company's ability to maintain and potentially enhance its profitability over the long term.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 7.46% | 6.02% | 8.02% | 8.85% | 9.10% |
| Return on assets (ROA) | 4.55% | 3.05% | 5.60% | 6.02% | 5.62% |
| Return on total capital | 29.12% | 24.00% | 34.74% | 39.82% | 40.98% |
| Return on equity (ROE) | 17.77% | 12.66% | 23.53% | 27.16% | 26.37% |
From the provided data, we can analyze Verizon Communications Inc's profitability ratios over the period from December 31, 2020, to December 31, 2024.
1. Operating return on assets (Operating ROA) decreased from 9.10% in 2020 to 8.85% in 2021, further declining to 8.02% in 2022, and then dropping notably to 6.02% in 2023. However, there was a slight improvement to 7.46% in 2024. This indicates a mixed performance in utilizing assets to generate operating profits over the period.
2. Return on assets (ROA) had a similar trend as Operating ROA, starting at 5.62% in 2020, increasing to 6.02% in 2021, but then declining to 5.60% in 2022 and significantly dropping to 3.05% in 2023. There was a slight recovery to 4.55% in 2024, indicating challenges in generating profits relative to total assets.
3. Return on total capital decreased from 40.98% in 2020 to 39.82% in 2021 and then notably dropped to 34.74% in 2022, followed by a further decline to 24.00% in 2023. However, there was a slight improvement to 29.12% in 2024, showing decreasing efficiency in generating profits from total capital employed over the period.
4. Return on equity (ROE) declined from 26.37% in 2020 to 27.16% in 2021, then decreased to 23.53% in 2022, and significantly dropped to 12.66% in 2023. However, there was a slight recovery to 17.77% in 2024. This indicates a declining trend in profitability relative to shareholders' equity, suggesting challenges in generating returns for equity holders.
In summary, Verizon Communications Inc experienced fluctuations in its profitability ratios over the period analyzed, with varying levels of performance in utilizing assets, generating profits relative to capital, and providing returns to equity holders. Effective management of assets and operations will be critical for the company to improve its profitability metrics in the future.