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
Expand Energy Corp., profitability ratios
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The financial performance of Expand Energy Corp. from 2021 to 2024 is characterized by extreme volatility, moving from a period of high profitability and improving operational efficiency to a significant downturn in the final year.
- Operating Profit Margin
- A strong upward trend was observed between 2021 and 2023, with the margin expanding from 9.64% to a peak of 51.96%. This indicates a substantial increase in operational efficiency or pricing power during this window. However, a sharp reversal occurred in 2024, as the margin collapsed to -18.85%, signaling a critical decline in core business profitability.
- Net Profit Margin
- The net profit margin began at an exceptionally high level of 86.67% in 2021, suggesting the presence of significant non-operating gains. The ratio subsequently stabilized between 34.95% and 40.00% during 2022 and 2023 before mirroring the operating margin's decline, falling to -16.76% in 2024.
- Return on Equity (ROE) and Return on Assets (ROA)
- Both ROE and ROA exhibited a consistent and precipitous decline over the analyzed period. ROE decreased from a high of 111.59% in 2021 to -4.06% in 2024. Similarly, ROA fell from 57.48% in 2021 to -2.56% in 2024. The steady erosion of these metrics suggests a diminishing ability to generate profits from the company's asset base and equity investment, culminating in negative returns.
In summary, while the period between 2021 and 2023 showed divergent trends—with operating efficiency improving while overall returns declined—the 2024 fiscal year represents a systemic failure in profitability across all measured ratios.
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Operating Profit Margin
Expand Energy Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Income (loss) from operations | (803) | 3,142) | 3,780) | 704) | |
| Revenues | 4,259) | 6,047) | 14,123) | 7,301) | |
| Profitability Ratio | |||||
| Operating profit margin1 | -18.85% | 51.96% | 26.76% | 9.64% | |
| Benchmarks | |||||
| Operating Profit Margin, Competitors2 | |||||
| Chevron Corp. | 14.63% | 15.37% | 21.42% | 14.81% | |
| ConocoPhillips | 26.64% | 30.57% | 36.80% | 29.84% | |
| ExxonMobil Holdings Corp. | 14.74% | 16.24% | 19.82% | 11.91% | |
| Operating Profit Margin, Sector | |||||
| Oil, Gas & Consumable Fuels | 15.81% | 17.32% | 22.22% | 14.57% | |
| Operating Profit Margin, Industry | |||||
| Energy | 15.82% | 17.27% | 21.94% | 14.46% | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2024 Calculation
Operating profit margin = 100 × Income (loss) from operations ÷ Revenues
= 100 × -803 ÷ 4,259 = -18.85%
2 Click competitor name to see calculations.
The operating profit margin exhibited significant fluctuations over the four-year period. Initial growth was followed by a substantial decline, culminating in a negative margin in the most recent year.
- Operating Profit Margin Trend
- In 2021, the operating profit margin stood at 9.64%. This increased substantially to 26.76% in 2022, indicating improved operational efficiency or pricing power. The margin continued to rise dramatically in 2023, reaching 51.96%, suggesting a period of exceptionally strong profitability from core operations. However, a sharp reversal occurred in 2024, with the operating profit margin falling to -18.85%, signifying an operating loss.
The movement in operating profit margin closely mirrors the trend in income from operations. The substantial increases in operating income between 2021 and 2023 directly contributed to the rising margins. Conversely, the significant operating loss reported in 2024 is the primary driver of the negative margin observed in that year.
- Revenue Relationship
- Revenues increased significantly from 2021 to 2022, and while remaining high in 2023, decreased substantially in 2024. The initial revenue growth likely supported the margin expansion in 2022. However, the decline in revenues in 2024, coupled with an operating loss, resulted in the substantial margin contraction. The disproportionate decline in revenues compared to the operating loss suggests that fixed costs may be playing a significant role in the 2024 results.
The volatility in the operating profit margin warrants further investigation. Understanding the factors contributing to the dramatic shift from profitability to loss in 2024 is crucial. This includes a detailed analysis of cost structures, revenue drivers, and any unusual items impacting operating income.
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Net Profit Margin
Expand Energy Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Net income (loss) | (714) | 2,419) | 4,936) | 6,328) | |
| Revenues | 4,259) | 6,047) | 14,123) | 7,301) | |
| Profitability Ratio | |||||
| Net profit margin1 | -16.76% | 40.00% | 34.95% | 86.67% | |
| Benchmarks | |||||
| Net Profit Margin, Competitors2 | |||||
| Chevron Corp. | 9.13% | 10.85% | 15.05% | 10.04% | |
| ConocoPhillips | 16.89% | 19.52% | 23.80% | 17.63% | |
| ExxonMobil Holdings Corp. | 9.93% | 10.76% | 13.98% | 8.33% | |
| Net Profit Margin, Sector | |||||
| Oil, Gas & Consumable Fuels | 10.31% | 11.63% | 15.41% | 9.78% | |
| Net Profit Margin, Industry | |||||
| Energy | 10.43% | 11.68% | 15.29% | 9.70% | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2024 Calculation
Net profit margin = 100 × Net income (loss) ÷ Revenues
= 100 × -714 ÷ 4,259 = -16.76%
2 Click competitor name to see calculations.
The net profit margin exhibited significant fluctuations over the four-year period. Initially high, the metric experienced a substantial decline, followed by a partial recovery and then a significant loss.
- Net Profit Margin Trend
- In 2021, the net profit margin stood at 86.67%. This represents a very strong profitability position. However, a dramatic decrease was observed in 2022, with the net profit margin falling to 34.95%. A partial recovery occurred in 2023, as the net profit margin increased to 40.00%. This improvement, however, proved unsustainable, as the metric turned negative in 2024, reaching -16.76%.
The volatility in net profit margin appears closely linked to revenue fluctuations. While net income decreased across the period, the largest decline occurred between 2022 and 2023. Revenues more than doubled between 2021 and 2022, but then decreased significantly in both 2023 and 2024. The negative net profit margin in 2024 suggests that the company incurred a net loss despite a relatively stable revenue figure compared to 2023.
- Relationship to Net Income and Revenues
- The net profit margin is calculated as net income divided by revenues. The substantial decline in net income from 2021 to 2024, coupled with the revenue changes, directly drove the observed fluctuations in the net profit margin. The 2024 result indicates that costs and expenses exceeded revenues, resulting in a net loss and a negative margin.
The shift from a high margin in 2021 to a loss in 2024 warrants further investigation into the underlying drivers of cost of goods sold, operating expenses, and any non-operating items impacting net income. The company’s ability to restore profitability will depend on its capacity to manage costs effectively and/or increase revenue.
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Return on Equity (ROE)
Expand Energy Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Net income (loss) | (714) | 2,419) | 4,936) | 6,328) | |
| Stockholders’ equity | 17,565) | 10,729) | 9,124) | 5,671) | |
| Profitability Ratio | |||||
| ROE1 | -4.06% | 22.55% | 54.10% | 111.59% | |
| Benchmarks | |||||
| ROE, Competitors2 | |||||
| Chevron Corp. | 11.59% | 13.28% | 22.27% | 11.24% | |
| ConocoPhillips | 14.27% | 22.23% | 38.91% | 17.79% | |
| ExxonMobil Holdings Corp. | 12.77% | 17.58% | 28.58% | 13.67% | |
| ROE, Sector | |||||
| Oil, Gas & Consumable Fuels | 12.60% | 16.46% | 27.31% | 13.24% | |
| ROE, Industry | |||||
| Energy | 12.96% | 16.67% | 26.98% | 13.21% | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2024 Calculation
ROE = 100 × Net income (loss) ÷ Stockholders’ equity
= 100 × -714 ÷ 17,565 = -4.06%
2 Click competitor name to see calculations.
The Return on Equity (ROE) exhibited a significant declining trend over the four-year period. Initially strong, the ratio decreased substantially, ultimately resulting in a negative value in the most recent year.
- ROE Trend
- In 2021, ROE stood at 111.59%. This figure decreased considerably to 54.10% in 2022, representing a substantial reduction in profitability relative to equity. The decline continued in 2023, with ROE falling to 22.55%. By 2024, ROE had turned negative, registering at -4.06%, indicating a loss generated for each dollar of shareholder equity.
- Net Income Impact
- The decrease in ROE correlates with the trend in net income. Net income decreased from US$6,328 million in 2021 to US$4,936 million in 2022, then further to US$2,419 million in 2023. The most significant change occurred between 2023 and 2024, with net income becoming a loss of US$-714 million. This decline in net income is a primary driver of the observed ROE reduction.
- Stockholders’ Equity Impact
- Stockholders’ equity increased consistently throughout the period, rising from US$5,671 million in 2021 to US$17,565 million in 2024. While increasing equity generally suggests financial strength, the simultaneous decline in net income meant that the returns generated on this equity diminished, and ultimately became negative. The increasing equity base amplified the impact of the net loss in 2024, contributing to the negative ROE.
The combination of decreasing net income and increasing stockholders’ equity resulted in a dramatic decrease in ROE. The shift to a negative ROE in 2024 warrants further investigation to understand the underlying causes of the loss and the sustainability of the equity growth.
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Return on Assets (ROA)
Expand Energy Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Net income (loss) | (714) | 2,419) | 4,936) | 6,328) | |
| Total assets | 27,894) | 14,376) | 15,468) | 11,009) | |
| Profitability Ratio | |||||
| ROA1 | -2.56% | 16.83% | 31.91% | 57.48% | |
| Benchmarks | |||||
| ROA, Competitors2 | |||||
| Chevron Corp. | 6.87% | 8.17% | 13.76% | 6.52% | |
| ConocoPhillips | 7.53% | 11.42% | 19.91% | 8.91% | |
| ExxonMobil Holdings Corp. | 7.43% | 9.57% | 15.10% | 6.80% | |
| ROA, Sector | |||||
| Oil, Gas & Consumable Fuels | 7.27% | 9.31% | 15.25% | 6.99% | |
| ROA, Industry | |||||
| Energy | 7.37% | 9.28% | 14.84% | 6.84% | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2024 Calculation
ROA = 100 × Net income (loss) ÷ Total assets
= 100 × -714 ÷ 27,894 = -2.56%
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibited a significant downward trend over the four-year period. Initially strong, the ratio declined progressively, ultimately resulting in a negative value in the most recent year.
- ROA Trend
- In 2021, the ROA stood at 57.48%. This represents a highly efficient utilization of assets to generate profit. However, a substantial decrease was observed in 2022, with the ROA falling to 31.91%. The decline continued in 2023, reaching 16.83%. By 2024, the ROA had turned negative, registering at -2.56%, indicating that the company’s assets were generating a loss rather than a profit.
- Net Income Impact
- The decrease in ROA correlates with a decline in net income. Net income decreased from US$6,328 million in 2021 to US$4,936 million in 2022, then further to US$2,419 million in 2023. The most significant change occurred between 2023 and 2024, with net income becoming a loss of US$-714 million. This substantial reduction in profitability directly contributed to the negative ROA in 2024.
- Asset Base Impact
- Total assets increased from US$11,009 million in 2021 to US$15,468 million in 2022, and then decreased slightly to US$14,376 million in 2023. However, a considerable increase in total assets occurred in 2024, reaching US$27,894 million. While asset growth can be a sign of expansion, the simultaneous decline in net income suggests that the increased asset base was not effectively utilized to generate corresponding profits, exacerbating the decline in ROA.
The combined effect of decreasing net income and, particularly, the substantial increase in total assets in the final year, resulted in a marked deterioration of the company’s ROA. The negative ROA in 2024 warrants further investigation to understand the underlying causes and potential corrective actions.
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