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
Stryker Corp., profitability ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The profitability profile from 2017 to 2021 is characterized by consistent gross margins, a gradual contraction in operating efficiency, and significant volatility in net returns, including a notable peak in 2018.
- Gross Profitability
- Gross profit margins remained remarkably stable throughout the five-year period, maintaining a range between 63.11% and 65.72%. A marginal decline was observed in 2020, followed by a recovery to 64.11% in 2021, suggesting a consistent ability to manage direct costs of sales relative to revenue.
- Operating Performance
- Operating profit margins exhibit a downward trend over the analyzed period. After reaching a peak of 18.65% in 2018, the margin declined to 15.10% by 2021. This contraction indicates an increase in operating expenses as a percentage of revenue, which offset the stability seen at the gross profit level.
- Net Profitability and Return Metrics
- A significant anomaly is observed in 2018, where the net profit margin surged to 26.12%, coinciding with peaks in return on equity (ROE) at 30.29% and return on assets (ROA) at 13.05%. Following this spike, these metrics normalized. From 2019 to 2021, the net profit margin stabilized between 11.14% and 13.99%, while ROE and ROA converged toward 13.40% and 5.76%, respectively, by the end of 2021.
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Gross Profit Margin
Stryker Corp., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | 10,968) | 9,057) | 9,696) | 8,938) | 8,173) | |
| Net sales | 17,108) | 14,351) | 14,884) | 13,601) | 12,444) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 64.11% | 63.11% | 65.14% | 65.72% | 65.68% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | 52.21% | — | — | — | — | |
| Elevance Health Inc. | 17.09% | — | — | — | — | |
| Intuitive Surgical Inc. | 69.32% | — | — | — | — | |
| Medtronic PLC | 65.19% | — | — | — | — | |
| UnitedHealth Group Inc. | 23.60% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × 10,968 ÷ 17,108 = 64.11%
2 Click competitor name to see calculations.
The financial performance from 2017 through 2021 exhibits a general upward trajectory in scale, interrupted by a contraction in 2020. Net sales grew consistently from 2017 to 2019, peaking at US$ 14,884 million before experiencing a decrease to US$ 14,351 million in 2020. A significant recovery occurred in 2021, with sales reaching US$ 17,108 million.
- Gross Profit Trends
- Gross profit followed a pattern closely aligned with net sales, increasing from US$ 8,173 million in 2017 to US$ 9,696 million in 2019. A decline was observed in 2020, with gross profit falling to US$ 9,057 million, followed by a sharp increase to US$ 10,968 million in 2021.
- Gross Profit Margin Analysis
- The gross profit margin demonstrated high stability between 2017 and 2019, maintaining a narrow range between 65.14% and 65.72%. A contraction occurred in 2020, with the margin descending to a period low of 63.11%. Although a partial recovery to 64.11% was recorded in 2021, the margin remained below the levels observed prior to 2020, suggesting a shift in the cost of goods sold or a change in the product mix relative to revenue.
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Operating Profit Margin
Stryker Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 2,584) | 2,223) | 2,713) | 2,537) | 2,290) | |
| Net sales | 17,108) | 14,351) | 14,884) | 13,601) | 12,444) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 15.10% | 15.49% | 18.23% | 18.65% | 18.40% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | 19.56% | — | — | — | — | |
| Elevance Health Inc. | 5.15% | — | — | — | — | |
| Intuitive Surgical Inc. | 31.89% | — | — | — | — | |
| Medtronic PLC | 14.89% | — | — | — | — | |
| UnitedHealth Group Inc. | 8.40% | — | — | — | — | |
| Operating Profit Margin, Sector | ||||||
| Health Care Equipment & Services | 9.13% | — | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Health Care | 18.04% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × 2,584 ÷ 17,108 = 15.10%
2 Click competitor name to see calculations.
The financial performance from 2017 to 2021 is characterized by overall revenue growth alongside a gradual compression of operating margins. While the company expanded its top-line scale, the efficiency of converting sales into operating profit declined during the latter part of the period.
- Revenue Trajectory
- Net sales demonstrated a general upward trend, rising from US$ 12,444 million in 2017 to US$ 17,108 million in 2021. A notable disruption occurred in 2020, where sales declined to US$ 14,351 million before experiencing a sharp recovery in 2021.
- Operating Income Dynamics
- Operating income increased steadily from 2017, reaching a peak of US$ 2,713 million in 2019. Following a dip to US$ 2,223 million in 2020, the income recovered to US$ 2,584 million in 2021; however, this figure remained below the 2019 peak despite significantly higher sales volumes.
- Operating Profit Margin Analysis
- Operating margins remained relatively stable between 18.23% and 18.65% from 2017 through 2019. A significant contraction is observed starting in 2020, with the margin dropping to 15.49%, and continuing to decline to 15.10% in 2021. The divergence between increasing net sales and decreasing margins in 2021 indicates that operating expenses grew at a faster rate than revenue.
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Net Profit Margin
Stryker Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings | 1,994) | 1,599) | 2,083) | 3,553) | 1,020) | |
| Net sales | 17,108) | 14,351) | 14,884) | 13,601) | 12,444) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 11.66% | 11.14% | 13.99% | 26.12% | 8.20% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | 16.42% | — | — | — | — | |
| Elevance Health Inc. | 4.46% | — | — | — | — | |
| Intuitive Surgical Inc. | 29.85% | — | — | — | — | |
| Medtronic PLC | 11.97% | — | — | — | — | |
| UnitedHealth Group Inc. | 6.06% | — | — | — | — | |
| Net Profit Margin, Sector | ||||||
| Health Care Equipment & Services | 7.14% | — | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Health Care | 15.24% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net profit margin = 100 × Net earnings ÷ Net sales
= 100 × 1,994 ÷ 17,108 = 11.66%
2 Click competitor name to see calculations.
The financial performance from 2017 to 2021 is characterized by a general expansion in top-line revenue accompanied by significant volatility in bottom-line profitability. While net sales grew steadily over the five-year period, net earnings and the resulting profit margins exhibited substantial fluctuations, most notably a sharp peak in 2018 followed by a period of normalization.
- Net Sales Growth
- An upward trajectory in net sales is observed, rising from 12,444 million US$ in 2017 to 17,108 million US$ by 2021. This growth was nearly linear until 2020, which saw a slight contraction to 14,351 million US$, before a significant recovery in the final year of the analyzed period.
- Net Profit Margin Volatility
- The net profit margin demonstrated extreme variance, beginning at 8.20% in 2017 and spiking to 26.12% in 2018. This anomaly was followed by a sharp correction to 13.99% in 2019 and a further decline to 11.14% in 2020, suggesting a non-recurring gain or a significant accounting adjustment in the 2018 fiscal year.
- Earnings Performance
- Net earnings peaked in 2018 at 3,553 million US$, which was more than triple the earnings of the previous year. Subsequent years showed a downward trend in absolute earnings, hitting a low of 1,599 million US$ in 2020, before increasing to 1,994 million US$ in 2021. This recovery in earnings aligns with the surge in net sales during the same period.
- Profitability Stabilization
- Following the volatility observed between 2018 and 2019, the net profit margin appears to have stabilized in the 11% to 12% range. The increase from 11.14% in 2020 to 11.66% in 2021 indicates a slight improvement in operational efficiency or cost management as sales volumes returned to growth.
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Return on Equity (ROE)
Stryker Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings | 1,994) | 1,599) | 2,083) | 3,553) | 1,020) | |
| Total Stryker shareholders’ equity | 14,877) | 13,084) | 12,807) | 11,730) | 9,966) | |
| Profitability Ratio | ||||||
| ROE1 | 13.40% | 12.22% | 16.26% | 30.29% | 10.23% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Abbott Laboratories | 19.75% | — | — | — | — | |
| Elevance Health Inc. | 16.93% | — | — | — | — | |
| Intuitive Surgical Inc. | 14.32% | — | — | — | — | |
| Medtronic PLC | 7.01% | — | — | — | — | |
| UnitedHealth Group Inc. | 24.09% | — | — | — | — | |
| ROE, Sector | ||||||
| Health Care Equipment & Services | 17.28% | — | — | — | — | |
| ROE, Industry | ||||||
| Health Care | 25.44% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
ROE = 100 × Net earnings ÷ Total Stryker shareholders’ equity
= 100 × 1,994 ÷ 14,877 = 13.40%
2 Click competitor name to see calculations.
The profitability profile between 2017 and 2021 is characterized by significant volatility in net earnings coupled with a consistent expansion of the equity base. A notable peak in performance occurred in 2018, followed by a period of correction and gradual stabilization.
- Return on Equity (ROE) Trends
- ROE exhibited a sharp increase from 10.23% in 2017 to a peak of 30.29% in 2018. This peak was followed by a decline to 16.26% in 2019 and a further contraction to 12.22% in 2020. A modest recovery was observed in 2021, with the ratio rising to 13.40%.
- Net Earnings Volatility
- Net earnings experienced a substantial spike in 2018, reaching 3,553 million US dollars. This figure subsequently decreased to 2,083 million in 2019 and 1,599 million in 2020, before trending upward again to 1,994 million in 2021. The fluctuations in net earnings served as the primary driver for the volatility observed in the ROE.
- Shareholders' Equity Growth
- A steady upward trajectory is observed in total shareholders' equity, which grew consistently from 9,966 million US dollars in 2017 to 14,877 million US dollars in 2021. This continuous growth in the equity base acted as a denominator effect, contributing to the moderation of ROE in the later years despite the recovery in net earnings in 2021.
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Return on Assets (ROA)
Stryker Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings | 1,994) | 1,599) | 2,083) | 3,553) | 1,020) | |
| Total assets | 34,631) | 34,330) | 30,167) | 27,229) | 22,197) | |
| Profitability Ratio | ||||||
| ROA1 | 5.76% | 4.66% | 6.90% | 13.05% | 4.60% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Abbott Laboratories | 9.40% | — | — | — | — | |
| Elevance Health Inc. | 6.26% | — | — | — | — | |
| Intuitive Surgical Inc. | 12.58% | — | — | — | — | |
| Medtronic PLC | 3.87% | — | — | — | — | |
| UnitedHealth Group Inc. | 8.15% | — | — | — | — | |
| ROA, Sector | ||||||
| Health Care Equipment & Services | 7.28% | — | — | — | — | |
| ROA, Industry | ||||||
| Health Care | 9.46% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
ROA = 100 × Net earnings ÷ Total assets
= 100 × 1,994 ÷ 34,631 = 5.76%
2 Click competitor name to see calculations.
The financial performance from 2017 to 2021 is characterized by a steady expansion of the asset base contrasted with significant volatility in net earnings, resulting in an inconsistent Return on Assets (ROA) profile.
- Asset Base Expansion
- Total assets demonstrated a consistent upward trend throughout the period, growing from US$ 22,197 million in 2017 to US$ 34,631 million in 2021. This steady increase indicates a continuous investment in the company's resource base.
- Net Earnings Volatility
- Net earnings exhibited substantial fluctuations, starting at US$ 1,020 million in 2017 and peaking sharply at US$ 3,553 million in 2018. A downward trend followed, with earnings dropping to US$ 2,083 million in 2019 and reaching a period low of US$ 1,599 million in 2020, before recovering to US$ 1,994 million in 2021.
- Return on Assets (ROA) Interpretation
- The ROA mirrored the volatility of net earnings, reaching a maximum of 13.05% in 2018. Following this peak, the ratio declined sharply to 6.90% in 2019 and further to 4.66% in 2020, effectively returning to 2017 levels despite the significantly larger asset base. A slight recovery to 5.76% was recorded in 2021, suggesting a stabilization in asset productivity.
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