Do You Know How Profitable Enviva (EVA) Is?

Does mid-cap Lumber & Wood Production company Enviva have a sustainably profitable business model? By studying its gross margins and comparing them to its operating margins, we can gain insight into quality of its business. With gross margins at 7.5%, you might be telling yourself the Enviva is profitable — but there is more to the story.

Gross margins take into account only the cost of revenue, meaning the expenses directly related to each sale. So it's important to also look at operating margins, which take into account overhead costs. One way to look at it is that gross profit gives insight into Enviva's market and the viability of its business model. Operating margins, on the other hand, show you how efficiently the company is implementing this business model.

Date Reported Revenue ($ MM) Cost of Revenue ($ MM) Gross Margins (%) YoY Growth (%)
2021-12-31 1,042 964 7.47 -38.97
2020-12-31 875 768 12.24 3.29
2019-12-31 684 603 11.85 n/a

Enviva's gross margins are currently in the green, but this might not be the case for long. Since its cost of revenue is growing at a rate of 59.8% compared to 23.4% for its revenues, its gross margins have been shrinking -17.8% on average each year.

Date Reported Total Revenue ($ MM) Operating Expenses ($ MM) Operating Margins (%) YoY Growth (%)
2021-12-31 1,042 175 -9.34 -232.29
2020-12-31 875 45 7.06 8.12
2019-12-31 684 36 6.53 n/a

Despite the negative operating margins in the last year, Enviva's average is still positive, indicating that the company is generally profitable. There's a red flag, however, indicating that the last year could be part of a negative trend. Enviva's operating expenses are growing at an average rate of 155.4%, whilst its revenues are growing at only 23.4%.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.