Expand Energy Corp. (NASDAQ:EXE)

Return on Assets (ROA)

The Return on Assets showed a significant upward trend from the first quarter of 2022 through the first quarter of 2023, rising from a negative value of -0.86% to a peak of 48.58%. This rapid increase indicates improved efficiency in asset utilization during this period. However, after reaching this peak, the ROA gradually declined over the subsequent quarters, falling to negative values again by the first quarter of 2025 at -3.54%. This downward trend suggests a deterioration in asset profitability in the most recent periods.

Financial Leverage

Financial leverage steadily decreased from 2.47 in the first quarter of 2022 to a low of approximately 1.31 between the third quarter of 2023 and the third quarter of 2024, indicating a reduction in the company’s reliance on debt financing relative to equity. However, there was a slight increase in leverage during the final two recorded quarters, rising to 1.62 by the first quarter of 2025. This may imply a strategic shift back toward higher debt usage following a period of deleveraging.

Return on Equity (ROE)

The Return on Equity mirrored the pattern seen in ROA, with a sharp rise from -2.12% in early 2022 to a peak of 68.94% in the first quarter of 2023, reflecting strong profitability and efficient equity use. After this peak, the ROE steadily decreased across the following quarters, turning negative again by the last quarter of the dataset, hitting -5.75% in the first quarter of 2025. This decline illustrates a weakening in the company’s ability to generate returns for shareholders.

Overall Insights

The initial period of analysis showed strong improvement in both asset and equity returns alongside a reduction in financial leverage, suggesting a possible focus on strengthening operational performance and financial stability. The subsequent decline in profitability ratios, despite a relatively stable and low leverage level for several quarters, may indicate challenges such as increased costs, reduced revenues, or other operational issues impacting overall financial performance toward the end of the observed timeframe. The modest increase in leverage toward the end might reflect efforts to support operations or investments in response to these challenges.

The financial indicators demonstrate notable fluctuations over the presented periods, revealing shifts in profitability, efficiency, leverage, and overall shareholder returns.

Net Profit Margin

The net profit margin shows a significant rise from a negative value of -1.32% at the beginning to a peak of 68.67% in the third quarter of 2023. This upward trend reflects a marked improvement in the company's profitability during this period. However, starting in the fourth quarter of 2023, the margin declines sharply, turning negative again by the first quarter of 2025, ending at -15.06%. This reversal indicates deteriorating profitability or increased costs impacting net earnings adversely.

Asset Turnover

Asset turnover increases steadily from 0.65 to 0.96 by the third quarter of 2022, indicating improved efficiency in generating revenue from assets. After reaching this peak, there is a continuous decline through the subsequent periods down to 0.15 in the fourth quarter of 2024. A partial recovery to 0.24 occurs by the first quarter of 2025, but overall, the trend suggests diminishing asset utilization efficiency over time.

Financial Leverage

Financial leverage decreases from 2.47 in the first quarter of 2022 to stabilize around 1.3 through 2023 and most of 2024, reflecting a reduction in reliance on debt or lower use of borrowed funds to finance assets. A slight increase to approximately 1.6 occurs near the end of the period, potentially indicating a renewed use of leverage. The relatively low and stable ratios compared to the initial values suggest a conservative approach to debt financing during the majority of the period.

Return on Equity (ROE)

The ROE follows a trajectory similar to net profit margin, improving sharply from a negative figure of -2.12% initially to a peak of 68.94% in the first quarter of 2023. Subsequently, it declines steadily, dropping below zero again in early 2025. The trend highlights a strong but short-lived enhancement in shareholder returns, followed by a marked deterioration, underscoring challenges in sustaining profitability and effective equity utilization.

Overall, the data indicate that the company experienced a period of significant operational and financial improvement up to early 2023, as evidenced by rising profitability and returns. However, from mid-2023 onward, there is a clear reversal with declining efficiency, profitability, and returns, which could be associated with operational difficulties, market conditions, or increased costs. The relatively stable but low financial leverage suggests limited risk exposure from debt during most of the period, though the slight increase towards the end may merit attention.

Tax Burden

The tax burden ratio exhibits fluctuations within the observed periods. Initially above 1.0 in mid-2022, it peaks at 1.35 in the last quarter of 2022 before gradually declining and stabilizing below 1.0 between late 2023 and early 2024. This pattern suggests variability in taxation impact on pre-tax earnings, with relative improvement in tax efficiency in more recent quarters.

Interest Burden

The interest burden ratio remains relatively stable, close to 0.93-0.97 for most periods from mid-2022 through late 2023. A gradual decline is noted starting early 2024, reaching approximately 0.80 by the third quarter of 2024, indicating reduced influence of interest expenses on operating earnings over time.

EBIT Margin

The EBIT margin shows significant volatility. After a negative start in early 2022, it rapidly improves, peaking at 59.37% in the third quarter of 2023. Subsequently, there is a sharp decline beginning in late 2023, turning negative by the end of 2024 and early 2025. This trajectory indicates strong profitability gains initially, followed by deteriorating operational performance toward the latest quarters.

Asset Turnover

Asset turnover ratio trends downward across the periods, starting at 0.65 in early 2022 and dropping to a low of 0.15 in early 2025 before a minor improvement. This continual decline reflects decreasing efficiency in using assets to generate revenue, which may have contributed to compressions in profitability metrics.

Financial Leverage

Financial leverage shows a decreasing trend from 2.47 in early 2022 to around 1.31 in the first three quarters of 2024, followed by a slight increase toward early 2025. This suggests a reduction in debt relative to equity over time, leading to a more conservative capital structure, before a modest uptick is observed recently.

Return on Equity (ROE)

Return on equity mirrors the EBIT margin trend closely, rising sharply from a negative value in early 2022 to a peak near 69% in the first quarter of 2023. Thereafter, a persistent downward progression occurs, turning negative again by late 2024 and early 2025. This pattern signifies a period of enhanced shareholder profitability, followed by a notable decline in returns.

Net Profit Margin

The net profit margin exhibited a significant upward trend starting from a negative value of -1.32% early in the period, reaching a peak of 68.67% in late 2023. This indicates a substantial improvement in profitability over the initial quarters. However, after this peak, the margin experienced a sharp decline, dropping to negative values of -16.76% and -15.06% by early 2025, suggesting deteriorating profitability toward the end of the timeframe.

Asset Turnover

The asset turnover ratio showed an initial increase from 0.65 to a high of 0.96, indicating enhanced efficiency in utilizing assets to generate sales. Following this peak, a continuous declining trend emerged, falling steadily to a low of 0.15 by late 2024, before slightly rebounding to 0.24 early in 2025. This decline points to a decreasing efficiency in asset utilization in recent periods.

Return on Assets (ROA)

ROA followed a similar pattern to net profit margin, starting with a negative value of -0.86% and climbing to a high of 48.58% mid-2023. This was followed by a downward trend, with ROA falling into negative territory again by the end of the period, reaching -3.54%. The initial rise indicates improved effectiveness in generating earnings from assets, whereas the later decline highlights diminishing returns on asset investments.

Overall Trends and Insights

The data reveals strong growth in profitability and asset efficiency during the initial quarters, with peak performance occurring around mid to late 2023. However, the latter part of the period is characterized by marked declines in all key indicators, culminating in negative profitability and returns. The decreasing asset turnover ratio suggests that the company was less effective at generating revenue from its assets during this time, which, combined with lower profit margins, led to a decline in overall asset returns. This pattern may signal operational challenges, increased costs, or other external factors adversely impacting financial performance after the peak period.

Tax Burden

The tax burden ratio demonstrates fluctuations over the observed periods. It starts slightly above 1.0 in the middle of 2022, indicating a tax expense slightly exceeding earnings before tax, peaks at 1.35 at the end of 2022, and generally trends downward afterward. From late 2023 through early 2024, it stabilizes around 0.78 to 0.81, suggesting relatively stable tax efficiency during these periods.

Interest Burden

The interest burden ratio remains fairly stable throughout the periods, with values mostly between 0.80 and 0.97. It shows a slight decline starting late 2023, dropping to 0.80 by the third quarter of 2024, which may indicate increased interest expenses or reduced capacity to cover interest costs from earnings.

EBIT Margin

The EBIT margin shows a marked improvement from a negative value at the start (March 2022) to a peak of 59.37% by September 2023, reflecting increasing operational profitability during this timeframe. However, beginning from December 2023, the margin declines sharply, turning negative by the end of 2024 and into 2025, indicating a reversal in income generation from operations and possible operational challenges.

Asset Turnover

Asset turnover experiences a steady decrease over the periods analyzed. It peaks near 0.96 in September 2022 but declines gradually to 0.15 by early 2025. This reduction signifies a decreasing efficiency in utilizing assets to generate revenue, which may contribute to the decline observed in profitability measures.

Return on Assets (ROA)

The return on assets mirrors the pattern seen in EBIT margin and asset turnover. It improves substantially from negative values in early 2022 to a peak of 48.58% in March 2023, followed by a continuous decline. By the end of the period, ROA turns negative, suggesting deteriorating asset utilization and overall profitability.

Tax Burden

The tax burden ratio exhibits some volatility across the periods. Initial values from 1.01 to 1.35 indicate fluctuations above unity, suggesting periods where taxes possibly increased earnings impact negatively or variations in non-tax adjustments. From the last quarter of 2023 to the first three quarters of 2024, the ratio stabilizes around 0.78 to 0.81, suggesting a reduced tax effect relative to previous periods. The absence of data for the last quarter of 2024 and first quarter of 2025 limits further trend assessment.

Interest Burden

The interest burden ratio remains relatively stable with minor fluctuations, starting from 0.93 in the second quarter of 2022, increasing marginally and holding at 0.97 through the end of 2023. In 2024, there is a decreasing trend from 0.94 in the first quarter to 0.80 by the third quarter, indicating a relative improvement in coverage of interest expenses or reduction in interest costs. The missing values in the final periods prevent complete evaluation.

EBIT Margin

The EBIT margin demonstrates a significant upward trend from negative territory (-1.35%) in the first quarter of 2022 to a high of approximately 59.37% by the third quarter of 2023, indicating strong operational performance improvements. However, post this peak, margins decline steadily to 12.03% by the third quarter of 2024 and turn negative (-16.86%) by the fourth quarter of 2024, maintaining negativity into the first quarter of 2025. This pattern suggests the company experienced substantial operational challenges or unusual expenses impacting earnings towards the end of the observed period.

Net Profit Margin

The net profit margin follows a similar trajectory to EBIT margins, improving from -1.32% in the first quarter of 2022 to a peak of 68.67% by the third quarter of 2023. Thereafter, a marked decline occurs, with margins falling to 7.72% by the third quarter of 2024 and entering negative territory again (-16.76%) by the fourth quarter of 2024, persisting into the first quarter of 2025. This pattern reflects the combined impact of operational performance, tax, and interest burden on bottom-line profitability, with a notable deterioration after mid-2023.

Overall Insights

The data reveals a period of strong profitability growth through 2022 and the first three quarters of 2023, supported by stable interest burden and variable tax effects. However, starting in late 2023 and continuing through 2024, there is a clear downward trend in profitability margins culminating in negative EBIT and net profit margins by the end of the dataset. This deterioration warrants further investigation into operational issues, cost management, or other external factors affecting performance. Interest burden trends suggest improving cost of debt or financial structure, while tax impacts vary. The volatility at the end of the period highlights increased risk or restructuring phases potentially underway.