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
Diamondback Energy Inc., 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 financial performance from 2017 through 2021 is characterized by a period of steady erosion, a severe contraction in 2020, and a robust recovery in 2021. Profitability metrics exhibit extreme volatility, with a notable collapse across all indicators during the 2019-2020 window, followed by a rebound that, in several instances, exceeded the baseline levels recorded in 2017.
- Operating and Net Profit Margins
- Operating profit margins were strong in 2017 and 2018, remaining above 47%, before decreasing to 17.88% in 2019 and falling to a significant deficit of -198.69% in 2020. A sharp recovery occurred in 2021, with the margin ascending to 59.30%, the peak for the analyzed period. Net profit margins followed a nearly identical pattern, declining from 40.65% in 2017 to -163.90% in 2020, before returning to a positive 32.34% in 2021.
- Return on Equity (ROE)
- Return on equity showed a progressive downward trend from 9.18% in 2017 to 1.81% in 2019, culminating in a sharp drop to -51.36% in 2020. By 2021, ROE experienced a substantial reversal, rising to 18.05%, which represents the highest rate of return on equity within the five-year timeframe.
- Return on Assets (ROA)
- The return on assets mirrored the trajectory of the other profitability ratios. ROA decreased from 6.21% in 2017 to 1.02% in 2019, before dropping to -25.64% in 2020. A recovery to 9.53% was recorded in 2021, indicating a return to positive asset productivity following the 2020 downturn.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Operating Profit Margin
Diamondback Energy Inc., 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) | ||||||
| Income (loss) from operations | 4,001) | (5,476) | 695) | 1,011) | 605) | |
| Revenue from contracts with customers | 6,747) | 2,756) | 3,887) | 2,130) | 1,186) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 59.30% | -198.69% | 17.88% | 47.46% | 51.00% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Chevron Corp. | 14.81% | — | — | — | — | |
| ConocoPhillips | 29.84% | — | — | — | — | |
| ExxonMobil Holdings Corp. | 11.91% | — | — | — | — | |
| Operating Profit Margin, Sector | ||||||
| Oil, Gas & Consumable Fuels | 14.57% | — | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Energy | 14.46% | — | — | — | — | |
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
Operating profit margin = 100 × Income (loss) from operations ÷ Revenue from contracts with customers
= 100 × 4,001 ÷ 6,747 = 59.30%
2 Click competitor name to see calculations.
The operating performance of the entity between 2017 and 2021 was characterized by significant volatility, marked by a steady decline in profitability that culminated in a severe operational loss in 2020, followed by a substantial recovery in 2021.
- Operating Profit Margin Trends (2017–2019)
- A consistent downward trajectory in the operating profit margin is observed during this period. While revenue increased from US$ 1,186 million in 2017 to US$ 3,887 million in 2019, the operating profit margin compressed from 51.00% to 17.88%. This divergence indicates that operating expenses grew at a rate that outpaced revenue growth, reducing the efficiency of operations.
- Operational Crisis (2020)
- The fiscal year 2020 represents a critical inflection point. Despite generating US$ 2,756 million in revenue, the entity recorded a substantial operating loss of US$ 5,476 million. This resulted in an operating profit margin of -198.69%, reflecting a period of extreme financial distress or significant non-recurring operational impairments.
- Recovery and Peak Performance (2021)
- A robust recovery occurred in 2021, with revenue reaching a five-year peak of US$ 6,747 million. Operating income rebounded to US$ 4,001 million, driving the operating profit margin to 59.30%. This figure represents the highest margin within the analyzed timeframe, surpassing the 2017 levels and indicating a significant restoration of operational efficiency and profitability.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Net Profit Margin
Diamondback Energy Inc., 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 income (loss) attributable to Diamondback Energy, Inc. | 2,182) | (4,517) | 240) | 846) | 482) | |
| Revenue from contracts with customers | 6,747) | 2,756) | 3,887) | 2,130) | 1,186) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 32.34% | -163.90% | 6.17% | 39.71% | 40.65% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Chevron Corp. | 10.04% | — | — | — | — | |
| ConocoPhillips | 17.63% | — | — | — | — | |
| ExxonMobil Holdings Corp. | 8.33% | — | — | — | — | |
| Net Profit Margin, Sector | ||||||
| Oil, Gas & Consumable Fuels | 9.78% | — | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Energy | 9.70% | — | — | — | — | |
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 income (loss) attributable to Diamondback Energy, Inc. ÷ Revenue from contracts with customers
= 100 × 2,182 ÷ 6,747 = 32.34%
2 Click competitor name to see calculations.
The net profit margin exhibited extreme volatility between 2017 and 2021, characterized by an initial period of stability, a severe contraction leading to a significant deficit, and a subsequent recovery. While revenue showed an overall upward trend, ending the period at its highest point, the net profit margin did not track linearly with revenue growth, indicating substantial fluctuations in cost structures or the impact of non-operational losses.
- Initial Stability and Margin Erosion (2017–2019)
- From 2017 to 2018, profitability remained consistent, with net profit margins holding near 40%. However, 2019 saw a sharp divergence; despite revenue increasing from US$ 2,130 million to US$ 3,887 million, the net profit margin contracted significantly to 6.17%. This suggests that expenses increased disproportionately relative to revenue growth during this timeframe.
- The 2020 Profitability Collapse
- A critical downturn occurred in 2020, where the net profit margin fell to -163.90%. This result was driven by a net loss of US$ 4,517 million against revenue of US$ 2,756 million. The fact that the loss exceeded total revenue indicates the occurrence of substantial extraordinary items or impairment charges that severely impacted the bottom line.
- Financial Recovery and Normalization (2021)
- The 2021 fiscal year demonstrated a robust rebound, with revenue surging to US$ 6,747 million and net income returning to US$ 2,182 million. This resulted in a net profit margin of 32.34%. While this marks a return to strong profitability, the margin remained below the 2017-2018 peaks, reflecting a recovery toward, but not a full return to, previous high-water marks of efficiency.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Return on Equity (ROE)
Diamondback Energy Inc., 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 income (loss) attributable to Diamondback Energy, Inc. | 2,182) | (4,517) | 240) | 846) | 482) | |
| Total Diamondback Energy, Inc. stockholders’ equity | 12,088) | 8,794) | 13,249) | 13,699) | 5,255) | |
| Profitability Ratio | ||||||
| ROE1 | 18.05% | -51.36% | 1.81% | 6.17% | 9.18% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Chevron Corp. | 11.24% | — | — | — | — | |
| ConocoPhillips | 17.79% | — | — | — | — | |
| ExxonMobil Holdings Corp. | 13.67% | — | — | — | — | |
| ROE, Sector | ||||||
| Oil, Gas & Consumable Fuels | 13.24% | — | — | — | — | |
| ROE, Industry | ||||||
| Energy | 13.21% | — | — | — | — | |
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 income (loss) attributable to Diamondback Energy, Inc. ÷ Total Diamondback Energy, Inc. stockholders’ equity
= 100 × 2,182 ÷ 12,088 = 18.05%
2 Click competitor name to see calculations.
The financial performance from 2017 to 2021 is characterized by significant volatility in profitability and capital structure, culminating in a sharp contraction in 2020 and a robust recovery in 2021.
- Net Income Trends
- Net income exhibited substantial fluctuations over the five-year period. After an initial increase from 482 million US$ in 2017 to 846 million US$ in 2018, earnings declined to 240 million US$ in 2019. A severe downturn occurred in 2020, resulting in a net loss of 4,517 million US$. This was followed by a strong reversal in 2021, where net income climbed to 2,182 million US$, the highest value in the analyzed period.
- Stockholders' Equity Dynamics
- Total stockholders' equity saw a rapid expansion between 2017 and 2018, increasing from 5,255 million US$ to 13,699 million US$. Equity levels remained relatively stable in 2019 before contracting to 8,794 million US$ in 2020, reflecting the impact of the significant net loss. By the end of 2021, equity recovered to 12,088 million US$.
- Return on Equity (ROE) Analysis
- The ROE displayed a consistent decline from 9.18% in 2017 to 1.81% in 2019, as the growth in the equity base outpaced net income growth. The ratio collapsed to -51.36% in 2020, directly correlating with the substantial net loss recorded for that year. However, the 2021 recovery was pronounced, with ROE surging to 18.05%, indicating a significant improvement in the efficiency of generating profits from shareholders' equity compared to the previous four years.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Return on Assets (ROA)
Diamondback Energy Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Diamondback Energy, Inc. | 2,182) | (4,517) | 240) | 846) | 482) | |
| Total assets | 22,898) | 17,619) | 23,531) | 21,596) | 7,771) | |
| Profitability Ratio | ||||||
| ROA1 | 9.53% | -25.64% | 1.02% | 3.92% | 6.21% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Chevron Corp. | 6.52% | — | — | — | — | |
| ConocoPhillips | 8.91% | — | — | — | — | |
| ExxonMobil Holdings Corp. | 6.80% | — | — | — | — | |
| ROA, Sector | ||||||
| Oil, Gas & Consumable Fuels | 6.99% | — | — | — | — | |
| ROA, Industry | ||||||
| Energy | 6.84% | — | — | — | — | |
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 income (loss) attributable to Diamondback Energy, Inc. ÷ Total assets
= 100 × 2,182 ÷ 22,898 = 9.53%
2 Click competitor name to see calculations.
The Return on Assets (ROA) for the period between 2017 and 2021 exhibited significant volatility, characterized by a steady decline leading up to a severe contraction in 2020, followed by a substantial recovery in 2021.
- Profitability Trends
- Net income demonstrated extreme fluctuations, peaking in 2021 at US$ 2,182 million after a profound loss of US$ 4,517 million in 2020. This volatility directly impacted the ROA, which shifted from a high of 9.53% in 2021 to a low of -25.64% in 2020.
- Asset Utilization and Scale
- Total assets expanded rapidly from US$ 7,771 million in 2017 to a peak of US$ 23,531 million by 2019. During this initial expansion phase, the growth in the asset base outpaced net income growth, resulting in a compression of the ROA from 6.21% to 1.02%.
- Recovery Analysis
- The fiscal year 2021 marked a significant pivot, with the ROA reaching its highest level of the five-year period at 9.53%. This recovery was driven by a sharp increase in net income, while the total asset base stabilized at US$ 22,898 million, indicating a marked improvement in the efficiency of asset employment compared to previous years.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?