Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Corning Inc., profitability ratios
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The five-year period analyzed shows a pattern of significant volatility across all profitability metrics, with a notable peak in 2021 followed by a steady decline through 2023.
- Margin Analysis
- Gross profit margins remained the most stable of the metrics, fluctuating within a range between 31.23% and 35.95%. In contrast, operating and net profit margins showed greater sensitivity. The operating profit margin reached a high of 15.00% in 2021 but decreased to 7.07% by 2023. The net profit margin followed a similar path, rising to 13.54% in 2021 before falling to 4.62% in 2023, returning to levels observed during the 2020 fiscal year.
- Return Metrics
- Efficiency in generating returns on capital and assets peaked sharply in 2021. Return on Equity (ROE) rose from 3.86% in 2020 to 15.45% in 2021, before contracting to 5.03% by 2023. Return on Assets (ROA) mirrored this movement, peaking at 6.32% in 2021 and dropping to 2.04% in 2023. The trend across these metrics indicates a reduction in overall profitability relative to the equity and asset base by the end of the period.
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Gross Profit Margin
Corning Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross margin | 3,931) | 4,506) | 5,063) | 3,531) | 4,035) | |
| Net sales | 12,588) | 14,189) | 14,082) | 11,303) | 11,503) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 31.23% | 31.76% | 35.95% | 31.24% | 35.08% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Apple Inc. | 44.13% | 43.31% | 41.78% | 38.23% | — | |
| Arista Networks Inc. | 61.95% | 61.07% | 63.80% | — | — | |
| Cisco Systems Inc. | 62.73% | 62.55% | 64.02% | — | — | |
| Dell Technologies Inc. | 22.18% | 21.63% | 31.22% | — | — | |
| Lumentum Holdings Inc. | 32.20% | 46.05% | 44.93% | — | — | |
| Super Micro Computer Inc. | 18.01% | 15.40% | 15.03% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Gross profit margin = 100 × Gross margin ÷ Net sales
= 100 × 3,931 ÷ 12,588 = 31.23%
2 Click competitor name to see calculations.
The analysis of profitability ratios from 2019 to 2023 reveals a period of volatility characterized by a significant peak in 2021 followed by a gradual contraction in both revenue and margin efficiency. While net sales reached their highest levels between 2021 and 2022, the gross profit margin failed to maintain its peak, indicating a disconnect between sales volume and cost management in the latter part of the period.
- Net Sales Performance
- Net sales exhibited a fluctuating trajectory, starting at 11,503 million US$ in 2019 and experiencing a slight contraction in 2020. A substantial increase was recorded in 2021, leading to a peak of 14,189 million US$ in 2022. However, a downward trend is observed in 2023, with net sales decreasing to 12,588 million US$.
- Gross Profit Margin Volatility
- The gross profit margin reflects a cyclical pattern over the five-year period. After starting at 35.08% in 2019, the margin declined to 31.24% in 2020 before rebounding to a peak of 35.95% in 2021. This was followed by a steady decrease, reaching 31.76% in 2022 and finishing at 31.23% in 2023, effectively returning to the profitability levels seen in 2020.
- Gross Margin Absolute Value Analysis
- In absolute terms, gross margin peaked in 2021 at 5,063 million US$. A notable divergence occurred between 2021 and 2022; despite net sales increasing from 14,082 million US$ to 14,189 million US$, the absolute gross margin fell to 4,506 million US$. This suggests that rising cost of goods sold outweighed the marginal increase in revenue. This contraction intensified in 2023, with the absolute gross margin falling to 3,931 million US$, the lowest value recorded in the analyzed period.
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Operating Profit Margin
Corning Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 890) | 1,438) | 2,112) | 509) | 1,306) | |
| Net sales | 12,588) | 14,189) | 14,082) | 11,303) | 11,503) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 7.07% | 10.13% | 15.00% | 4.50% | 11.35% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Apple Inc. | 29.82% | 30.29% | 29.78% | 24.15% | — | |
| Arista Networks Inc. | 38.52% | 34.86% | 31.37% | — | — | |
| Cisco Systems Inc. | 26.37% | 27.09% | 25.76% | — | — | |
| Dell Technologies Inc. | 5.64% | 4.60% | 5.46% | — | — | |
| Lumentum Holdings Inc. | -6.55% | 17.71% | 30.24% | — | — | |
| Super Micro Computer Inc. | 10.68% | 6.45% | 3.48% | — | — | |
| Operating Profit Margin, Sector | ||||||
| Technology Hardware & Equipment | 24.76% | 25.11% | 24.80% | — | — | |
| Operating Profit Margin, Industry | ||||||
| Information Technology | 24.34% | 26.23% | 26.58% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × 890 ÷ 12,588 = 7.07%
2 Click competitor name to see calculations.
The operating performance from 2019 through 2023 is characterized by significant volatility in both profitability margins and absolute operating income. The trajectory shows a sharp contraction in 2020, a robust recovery in 2021, and a progressive decline through 2023.
- Operating Profit Margin Trends
- The operating profit margin experienced extreme fluctuations over the five-year period. After starting at 11.35% in 2019, the margin plummeted to a period low of 4.50% in 2020. A substantial recovery followed in 2021, with the margin reaching a peak of 15.00%. However, this peak was not sustained, as margins contracted to 10.13% in 2022 and further declined to 7.07% by the end of 2023.
- Operating Income and Revenue Correlation
- A divergence between revenue growth and profit generation is observable. Net sales climbed from 11.303 billion in 2020 to a peak of 14.189 billion in 2022. Despite this revenue growth, operating income peaked earlier in 2021 at 2,112 million. The subsequent decline in operating income to 1,438 million in 2022, despite record sales, indicates a rise in operating expenses or a decrease in pricing power during that period.
- Recent Performance Contraction
- The most recent fiscal year indicates a simultaneous decline in both top-line and bottom-line performance. From 2022 to 2023, net sales decreased from 14.189 billion to 12.588 billion, while operating income dropped more precipitously from 1,438 million to 890 million. This resulting margin compression to 7.07% suggests an increase in the cost of goods sold or operating overhead relative to the diminishing revenue stream.
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Net Profit Margin
Corning Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Corning Incorporated | 581) | 1,316) | 1,906) | 512) | 960) | |
| Net sales | 12,588) | 14,189) | 14,082) | 11,303) | 11,503) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 4.62% | 9.27% | 13.54% | 4.53% | 8.35% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Apple Inc. | 25.31% | 25.31% | 25.88% | 20.91% | — | |
| Arista Networks Inc. | 35.62% | 30.87% | 28.52% | — | — | |
| Cisco Systems Inc. | 22.13% | 22.91% | 21.26% | — | — | |
| Dell Technologies Inc. | 2.39% | 5.50% | 3.45% | — | — | |
| Lumentum Holdings Inc. | -7.45% | 11.61% | 22.80% | — | — | |
| Super Micro Computer Inc. | 8.98% | 5.49% | 3.14% | — | — | |
| Net Profit Margin, Sector | ||||||
| Technology Hardware & Equipment | 20.57% | 21.31% | 21.21% | — | — | |
| Net Profit Margin, Industry | ||||||
| Information Technology | 20.24% | 22.27% | 23.48% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Net profit margin = 100 × Net income attributable to Corning Incorporated ÷ Net sales
= 100 × 581 ÷ 12,588 = 4.62%
2 Click competitor name to see calculations.
An analysis of profitability from 2019 to 2023 reveals a period of significant volatility in net profit margins. The financial results indicate a fluctuating relationship between net sales and net income, characterized by a sharp peak in 2021 followed by a steady contraction in profitability through 2023.
- Net Profit Margin Volatility
- The net profit margin experienced a notable decline from 8.35% in 2019 to 4.53% in 2020. This was followed by a substantial recovery and expansion to a five-year peak of 13.54% in 2021. However, this trend reversed in the subsequent years, with the margin retreating to 9.27% in 2022 and falling further to 4.62% by the end of 2023.
- Revenue and Net Income Correlation
- Net sales showed moderate growth between 2020 and 2022, peaking at US$ 14,189 million. Despite this revenue growth, net income exhibited much more aggressive swings. The most prominent divergence occurred in 2021, where a 24.6% increase in net sales compared to the previous year coincided with a 272.3% surge in net income, suggesting a period of high operational efficiency or significant non-operating gains.
- Recent Profitability Compression
- A downward trend is observed from 2021 through 2023. Although net sales in 2023 (US$ 12,588 million) remained higher than the levels recorded in 2019 and 2020, the net profit margin of 4.62% nearly mirrors the low seen in 2020. This indicates that recent declines in profitability are not solely driven by revenue loss, but by a compression of the bottom line relative to sales.
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Return on Equity (ROE)
Corning Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Corning Incorporated | 581) | 1,316) | 1,906) | 512) | 960) | |
| Total Corning Incorporated shareholders’ equity | 11,551) | 12,008) | 12,333) | 13,257) | 12,907) | |
| Profitability Ratio | ||||||
| ROE1 | 5.03% | 10.96% | 15.45% | 3.86% | 7.44% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Apple Inc. | 156.08% | 196.96% | 150.07% | 87.87% | — | |
| Arista Networks Inc. | 28.91% | 27.68% | 21.13% | — | — | |
| Cisco Systems Inc. | 28.44% | 29.70% | 25.66% | — | — | |
| Dell Technologies Inc. | — | — | 131.10% | — | — | |
| Lumentum Holdings Inc. | -9.71% | 10.61% | 20.14% | — | — | |
| Super Micro Computer Inc. | 32.45% | 20.00% | 10.20% | — | — | |
| ROE, Sector | ||||||
| Technology Hardware & Equipment | 100.63% | 122.76% | 96.47% | — | — | |
| ROE, Industry | ||||||
| Information Technology | 31.26% | 38.03% | 41.64% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
ROE = 100 × Net income attributable to Corning Incorporated ÷ Total Corning Incorporated shareholders’ equity
= 100 × 581 ÷ 11,551 = 5.03%
2 Click competitor name to see calculations.
The return on equity (ROE) for the period from 2019 to 2023 exhibits significant volatility, primarily driven by substantial fluctuations in net income. While the ROE reached a peak in 2021, the five-year trend concludes with a decline to levels lower than those recorded at the start of the period.
- Net Income Volatility
- Net income experienced sharp variations throughout the analyzed timeframe. Following a decline to 512 million US$ in 2020, a substantial increase occurred in 2021, where net income reached a peak of 1,906 million US$. This was followed by a consistent downward trajectory, falling to 1,316 million US$ in 2022 and further decreasing to 581 million US$ by December 31, 2023.
- Shareholders' Equity Trends
- Total shareholders' equity showed a general downward trend after 2020. After peaking at 13,257 million US$ in 2020, the equity base contracted annually, reaching 11,551 million US$ by the end of 2023. This steady reduction in the equity base indicates a decrease in total retained capital or other equity adjustments over the final three years of the period.
- Return on Equity (ROE) Correlation
- The ROE closely tracked the movements of net income. A low of 3.86% was recorded in 2020, which preceded a sharp rise to 15.45% in 2021. The subsequent contraction in net income resulted in a decline of ROE to 10.96% in 2022 and a further drop to 5.03% in 2023. The result is a significant erosion of the return generated on shareholders' capital by the end of the five-year sequence.
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Return on Assets (ROA)
Corning Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Corning Incorporated | 581) | 1,316) | 1,906) | 512) | 960) | |
| Total assets | 28,500) | 29,499) | 30,154) | 30,775) | 28,898) | |
| Profitability Ratio | ||||||
| ROA1 | 2.04% | 4.46% | 6.32% | 1.66% | 3.32% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Apple Inc. | 27.51% | 28.29% | 26.97% | 17.73% | — | |
| Arista Networks Inc. | 20.98% | 19.96% | 14.66% | — | — | |
| Cisco Systems Inc. | 12.38% | 12.57% | 10.86% | — | — | |
| Dell Technologies Inc. | 2.73% | 6.00% | 2.63% | — | — | |
| Lumentum Holdings Inc. | -2.84% | 4.78% | 11.19% | — | — | |
| Super Micro Computer Inc. | 17.42% | 8.90% | 4.99% | — | — | |
| ROA, Sector | ||||||
| Technology Hardware & Equipment | 20.39% | 21.50% | 18.83% | — | — | |
| ROA, Industry | ||||||
| Information Technology | 12.34% | 14.33% | 14.52% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
ROA = 100 × Net income attributable to Corning Incorporated ÷ Total assets
= 100 × 581 ÷ 28,500 = 2.04%
2 Click competitor name to see calculations.
The analysis of Return on Assets (ROA) from 2019 to 2023 reveals a period of significant volatility in profitability despite a relatively stable asset base. The ROA fluctuated between a low of 1.66% in 2020 and a peak of 6.32% in 2021, ending the period at 2.04% in 2023.
- Asset Base Stability
- Total assets remained consistent throughout the five-year period, oscillating within a narrow range between US$ 28.5 billion and US$ 30.8 billion. A slight peak was observed in 2020, followed by a gradual contraction to US$ 28.5 billion by the end of 2023.
- Net Income Volatility
- Net income exhibited substantial variance, serving as the primary driver for ROA fluctuations. Following a decline to US$ 512 million in 2020, earnings spiked to a high of US$ 1.91 billion in 2021 before experiencing a consecutive two-year decline, reaching US$ 581 million in 2023.
- ROA Performance Trends
- An erratic pattern is observed in asset utilization efficiency. The initial decline from 3.32% in 2019 to 1.66% in 2020 was followed by a sharp increase to 6.32% in 2021, marking the highest point of profitability relative to assets. This peak was followed by a downward trajectory, with the ratio falling to 4.46% in 2022 and further retreating to 2.04% in 2023, signaling a reduction in the company's ability to generate profit from its asset base.
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