Diamondback Energy Inc. (NASDAQ:FANG)

Total Asset Turnover

The total asset turnover ratio exhibits a fluctuating pattern over the period analyzed. Initially, there was a decline from 0.15 in 2017 to 0.10 in 2018, followed by recovery to 0.17 in 2019 and maintaining a similar level in 2020. A notable increase is observed in 2021, reaching 0.29 (reported) and 0.30 (adjusted), indicating improved efficiency in asset usage during the last year.

Debt to Equity Ratio

The debt to equity ratio steadily increased from 0.28 in 2017 to a peak of 0.66 in 2020, suggesting a growing reliance on debt financing. However, it decreased to 0.55 in 2021. The adjusted figures mirror this trend but remain slightly lower. This suggests a cautious deleveraging after reaching a high leverage point.

Debt to Capital Ratio

The debt to capital ratio also rose from 0.22 in 2017 to 0.40 in 2020, consistent with the increase in debt levels relative to capital. In 2021, there was a reduction to 0.36, indicating a partial reduction in overall debt burden.

Financial Leverage

Financial leverage increased steadily from 1.48 in 2017 to 2.00 in 2020, highlighting increased use of borrowed funds relative to equity. A slight decline to 1.89 was observed in 2021. Adjusted values are generally lower and show a more moderate increase from 1.37 to 1.67 in 2020, then a decrease to 1.57 in 2021, pointing to adjustments in reporting or valuation methods.

Net Profit Margin

There is high volatility in net profit margins. Initially strong margins around 40% persisted through 2018, then dramatically dropped to single digits in 2019 and plunged deeply into negative territory in 2020 (-163.9% reported, -207.33% adjusted). Recovery occurred in 2021, with margins returning to a healthy positive range (32.34% reported, 42.72% adjusted), indicating significant operational challenges in 2020 with some rebound thereafter.

Return on Equity (ROE)

ROE declined from moderate positive levels (9.18% reported in 2017) to very low values by 2019 and turned sharply negative in 2020 (-51.36% reported, -54.35% adjusted). The substantial negative returns likely reflect the losses seen in that year. Improvement is noted in 2021 to 18.05% (reported) and 19.82% (adjusted), suggesting recovery in profitability for shareholders.

Return on Assets (ROA)

ROA followed a similar trend with a decrease from 6.21% (reported) in 2017 to near zero in 2019, then a significant negative return in 2020 (-25.64% reported, -32.57% adjusted). By 2021, positive returns resumed, reaching 9.53% (reported) and 12.61% (adjusted), indicating improved asset profitability following the losses.

Revenue Trends

The revenue from contracts with customers exhibited significant growth over the period analyzed. Starting at US$1,186 million in 2017, revenue nearly doubled by 2018 to US$2,130 million. This upward trajectory accelerated sharply in 2019, reaching US$3,887 million, reflecting a strong expansion. Despite a decline in 2020, where revenue dropped to US$2,756 million, the subsequent year saw a remarkable recovery and surge to US$6,747 million, the highest value observed in the period.

Total Assets Trends

Total assets showed a steep increase from US$7,771 million in 2017 to US$21,596 million in 2018, indicating substantial investment or asset accumulation. This increase continued but at a slower pace, reaching US$23,531 million in 2019. However, in 2020, total assets decreased to US$17,619 million, suggesting divestments or asset write-downs. By 2021, total assets rebounded to US$22,898 million, approaching previous peak levels.

Asset Turnover Ratios

The reported total asset turnover ratio started relatively low at 0.15 in 2017 and declined further to 0.10 in 2018, despite growing assets and revenue. This ratio improved in 2019 to 0.17 and slightly decreased in 2020 to 0.16, reflecting modest changes in asset efficiency. A notable improvement occurred in 2021, with the ratio increasing sharply to 0.29, indicating enhanced utilization of assets in generating revenue. The adjusted total asset turnover ratio mirrors the reported trend closely, ending slightly higher at 0.30 in 2021.

Overall Insights

The data suggests that the company experienced robust revenue growth, particularly evident in 2019 and 2021, though with some volatility in 2020. Total assets expanded rapidly through 2018 and 2019 but faced a contraction in 2020 before recovering in 2021. The improvement in asset turnover ratios towards the end of the period implies increased operational efficiency and better asset utilization, which likely contributed to the strong revenue performance in 2021. The fluctuations in both asset base and turnover indicate a dynamic phase of asset management possibly aligned with market or strategic shifts.

The analysis of the financial data over the five-year period reveals several notable trends in the company's financial structure, particularly in its debt and equity positions.

Total Debt

Total debt showed a significant upward trend, increasing sharply from US$1,477 million in 2017 to US$6,687 million in 2021. This represents more than a fourfold increase over the period, indicating a substantial rise in leverage or borrowing activities.

Total Stockholders’ Equity

Stockholders’ equity experienced considerable fluctuations. It increased markedly from US$5,255 million in 2017 to a peak of US$13,699 million in 2018, followed by a slight decline to US$13,249 million in 2019. Subsequently, equity decreased sharply to US$8,794 million in 2020 before recovering to US$12,088 million in 2021. These movements suggest volatility in equity value, potentially influenced by retained earnings, market conditions, or capital transactions.

Reported Debt to Equity Ratio

The reported debt to equity ratio generally increased from 0.28 in 2017 to 0.66 in 2020, reflecting rising debt levels relative to equity. This ratio then decreased to 0.55 in 2021. The trend indicates growing financial leverage reaching a peak in 2020, followed by a somewhat reduced reliance on debt thereafter.

Adjusted Total Equity

Adjusted total equity values were consistently higher than reported stockholders’ equity, showing a similar pattern of increase until 2019, peaking at US$16,650 million, then declining to US$10,514 million in 2020 and rebounding to US$14,543 million in 2021. This adjusted measure likely accounts for additional factors influencing equity and corroborates the volatility seen in reported equity.

Adjusted Debt to Equity Ratio

The adjusted debt to equity ratio was slightly lower than the reported ratio each year but followed a similar trajectory. It rose from 0.26 in 2017 to 0.55 in 2020, indicating increased leverage, before declining to 0.46 in 2021. This suggests that although the company increased its use of debt financing significantly, its adjusted equity base somewhat mitigated the apparent leverage risk.

Overall, the data reflect a pattern of increased debt financing over the period, a peak in financial leverage around 2020, and some improvement in equity levels and leverage ratios in the following year. The fluctuations in equity values point to variable market or operational factors affecting the company's financial position during these years.

The financial data reveals notable changes and trends over the five-year period under review.

Total Debt

Total debt exhibited a significant upward trajectory, increasing steadily from 1,477 million US dollars in 2017 to 6,687 million US dollars in 2021. The most pronounced rise occurred between 2017 and 2018, followed by continued growth in subsequent years albeit at varying rates.

Total Capital

Total capital experienced substantial growth overall, rising from 6,732 million US dollars in 2017 to 18,775 million US dollars in 2021. The data reflects a sharp increase between 2017 and 2018, a moderate increase in 2019, a decline in 2020, and a recovery to the highest level recorded in 2021.

Reported Debt to Capital Ratio

The reported debt to capital ratio indicates increasing leverage from 0.22 in 2017 to a peak of 0.40 in 2020, before decreasing to 0.36 in 2021. This suggests a rising dependence on debt financing that somewhat eased in the final year.

Adjusted Total Capital

Adjusted total capital follows a pattern similar to total capital, displaying growth from 7,167 million US dollars in 2017 to 21,230 million US dollars in 2021. There is a peak in 2019 followed by a decline in 2020 and a rebound in 2021, consistent with the total capital movement but at generally higher levels.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio remains below the reported ratio each year, indicative of adjustments that lower the perceived leverage. The ratio increased from 0.21 in 2017 to 0.36 in 2020, then declined to 0.31 in 2021, mirroring the trend in the reported debt to capital ratio but reflecting somewhat less leverage overall.

In summary, the company’s financial structure shows increased debt levels and capital expansions over the period, with leverage ratios peaking in 2020 before improving slightly in 2021. The adjusted metrics suggest that the effective leverage may be somewhat mitigated by adjustments, although the general trend is toward higher debt utilization alongside growth in total capital.

Total Assets

The total assets exhibited significant volatility over the analyzed period. Starting at $7,771 million in 2017, there was a sharp increase to $21,596 million in 2018, followed by a moderate rise to $23,531 million in 2019. A decline occurred in 2020, with total assets decreasing to $17,619 million, before rebounding to $22,898 million in 2021. This pattern suggests considerable fluctuations in asset acquisition or valuation, possibly influenced by market conditions or business strategy adjustments.

Total Stockholders’ Equity

Stockholders’ equity mirrored a similar trend to total assets. It increased substantially from $5,255 million in 2017 to $13,699 million in 2018, then experienced a slight decrease to $13,249 million in 2019. Equity dropped more noticeably to $8,794 million in 2020 before partially recovering to $12,088 million in 2021. The decline in 2020 could indicate losses, dividend payments exceeding earnings, or other equity-reducing activities during that year.

Reported Financial Leverage

The reported financial leverage ratio demonstrated a gradual upward trend from 1.48 in 2017 to a peak of 2.00 in 2020, indicating an increase in liabilities relative to equity. In 2021, this ratio decreased to 1.89, suggesting a moderate reduction in leverage but maintaining a higher risk profile compared to earlier years. The rising leverage up to 2020 could reflect increased borrowing or financial obligations to support asset growth or operations.

Adjusted Total Assets

The adjusted total assets closely followed the pattern of reported total assets, with minor discrepancies. Starting at $7,771 million in 2017, increasing to $21,499 million in 2018 and $23,389 million in 2019, then declining to $17,546 million in 2020 before rising to $22,858 million in 2021. This consistency implies that adjustments made to account for valuation differences or accounting policies did not substantially alter the asset base trends.

Adjusted Total Equity

Adjusted equity showed a more robust recovery pattern and higher levels compared to reported equity. It rose from $5,690 million in 2017 to $15,854 million in 2018, further increasing to $16,650 million in 2019. A considerable decrease to $10,514 million took place in 2020, followed by an increase to $14,543 million in 2021. The higher figures relative to reported equity suggest that certain adjustments positively impacted equity valuation.

Adjusted Financial Leverage

The adjusted financial leverage ratio remained relatively stable from 2017 through 2019, hovering around 1.36 to 1.40, suggesting a consistent balance between assets and equity when adjusted for valuation or accounting differences. However, a noticeable increase to 1.67 occurred in 2020, indicating higher leverage during that year, which then declined to 1.57 in 2021. This pattern aligns with the fluctuations observed in reported leverage but reflects a less pronounced increase, suggesting more conservative leverage when adjustments are considered.

Net Income (Loss) Trends

The company exhibited strong net income growth from 2017 to 2018, increasing from $482 million to $846 million. However, net income declined sharply in 2019 to $240 million, before experiencing a significant loss of $4,517 million in 2020. In 2021, net income recovered substantially to $2,182 million, indicating a strong rebound after the previous year's loss.

Revenue Trends

Revenue showed consistent and substantial growth over the analyzed period, rising from $1,186 million in 2017 to $6,747 million in 2021. Despite a dip in 2020 to $2,756 million, the overall trend is positive, suggesting increasing sales or contract volume over time, with 2021 being a peak year.

Reported Net Profit Margin Analysis

The reported net profit margin was robust in 2017 and 2018, at approximately 41% and 40% respectively. Margins decreased sharply in 2019 to 6.17%, turning negative in 2020 at -163.9%, reflecting the significant net loss in that year. In 2021, the margin recovered to 32.34%, albeit below the initial peak years.

Adjusted Net Income Patterns

Adjusted net income followed a trend similar to net income but with slightly higher values. It grew from $496 million in 2017 to $1,114 million in 2018, then dropped to $362 million in 2019. There was a considerable negative adjustment in 2020 with an adjusted loss of $5,714 million. The company returned to positive adjusted net income of $2,882 million in 2021, exceeding the 2018 peak.

Adjusted Net Profit Margin Observations

The adjusted net profit margin peaked at 52.31% in 2018, signifying strong profitability after adjustments. It declined sharply to 9.31% in 2019 and plummeted to -207.33% in 2020, indicating severe losses. By 2021, adjusted profit margins rebounded sharply to 42.72%, although still below the peak but well above the negative 2020 buffer.

Summary of Financial Performance

Overall, the data indicates strong revenue growth throughout the period with significant fluctuations in profitability, particularly in 2019 and 2020. The pronounced losses in 2020, observed in both net and adjusted figures, suggest extraordinary events or challenges impacting earnings. The recovery in 2021 across all financial metrics demonstrates a return to profitability and improved operational performance following the downturn.

Over the period analyzed, the financial performance exhibited significant volatility with notable shifts across key metrics.

Net Income (Loss) Attributable to the Company

Initially, net income rose from 482 million in 2017 to a peak of 846 million in 2018, followed by a decline to 240 million in 2019. The period ending in 2020 showed a substantial loss of 4,517 million, before recovering strongly to a profit of 2,182 million in 2021.

Total Stockholders’ Equity

Equity exhibited a general upward trend from 5,255 million in 2017 to 13,699 million in 2018, with a slight decrease in 2019 to 13,249 million. There was a decline in 2020 to 8,794 million, followed by a recovery to 12,088 million in 2021.

Reported Return on Equity (ROE)

Reported ROE decreased from 9.18% in 2017 to 6.17% in 2018 and further dropped to 1.81% in 2019. A dramatic negative ROE of -51.36% was observed in 2020, reflecting the net loss during that period. In 2021, the ROE rebounded markedly to 18.05%.

Adjusted Net Income (Loss)

Similar to reported net income, adjusted net income increased from 496 million in 2017 to 1,114 million in 2018, declined to 362 million in 2019, and then recorded a significant loss of 5,714 million in 2020. The adjusted net income recovered to 2,882 million in 2021.

Adjusted Total Equity

Adjusted equity values rose steadily from 5,690 million in 2017 to 15,854 million in 2018, then increased further to 16,650 million in 2019. Following a decline to 10,514 million in 2020, adjusted equity improved again to 14,543 million in 2021.

Adjusted Return on Equity (ROE)

Adjusted ROE mirrored the reported ROE trend, starting at 8.72% in 2017, increasing slightly to 7.03% in 2018, before falling substantially to 2.17% in 2019. The measure dropped sharply to -54.35% in 2020, indicating severe losses, and then rose to a higher level of 19.82% in 2021.

In summary, the data reflects a challenging 2020 characterized by substantial losses and decreased equity, likely linked to extraordinary circumstances during that year. Both net income and equity measures showed strong recovery in 2021, exceeding prior peak levels in certain instances. Return on equity, both reported and adjusted, followed a comparable pattern of initial growth, a sharp decline in 2020, and a significant rebound in 2021, underscoring the company’s reinstated profitability and enhanced capital efficiency post-2020.

Net Income (Loss) Attributable to Diamondback Energy, Inc.

The net income showed significant volatility throughout the periods. Starting with a positive value of $482 million in 2017, it increased sharply to $846 million in 2018. However, in 2019 there was a notable decline to $240 million, followed by a steep loss of $4,517 million in 2020. The following year, 2021, reflected a strong recovery, with net income rising to $2,182 million.

Total Assets

Total assets demonstrated an overall upward trend, albeit with some fluctuations. From $7,771 million in 2017, total assets almost tripled to $21,596 million in 2018 and further grew slightly to $23,531 million in 2019. There was a contraction in 2020 to $17,619 million, likely reflecting the impact of the negative financial results and external factors affecting asset levels. In 2021, total assets rebounded again to $22,898 million.

Reported Return on Assets (ROA)

The reported ROA followed the fluctuating profitability trends. It declined from 6.21% in 2017 to 3.92% in 2018, then sharply dropped to 1.02% in 2019. In 2020, the ROA turned strongly negative at -25.64%, corresponding to the significant loss that year. In 2021, ROA recovered to 9.53%, indicating restored profitability relative to asset base.

Adjusted Net Income (Loss)

The adjusted net income showed patterns similar to reported net income but with more pronounced changes. Starting at $496 million in 2017, it rose significantly to $1,114 million in 2018 before dropping to $362 million in 2019. The adjusted figures recorded a steeper loss of $5,714 million in 2020, exceeding the reported loss. In 2021, there was a strong rebound to $2,882 million, outperforming the reported net income for the same year.

Adjusted Total Assets

Adjusted total assets mirrored the general trend of total assets, with slight variations. Beginning at $7,771 million in 2017, it increased to $21,499 million in 2018, then to $23,389 million in 2019. A decline to $17,546 million occurred in 2020, followed by a recovery to $22,858 million in 2021. The pattern suggests asset adjustments account for minor differences compared to reported figures.

Adjusted Return on Assets (ROA)

The adjusted ROA showed a trend consistent with adjusted net income changes but with more extreme values. It started at 6.39% in 2017 and rose to 5.18% in 2018, before declining to 1.55% in 2019. A significant negative ROA of -32.57% was recorded in 2020, reflecting the steep adjusted loss that year. In 2021, the adjusted ROA rebounded strongly to 12.61%, surpassing reported ROA and indicating improved performance on an adjusted basis.