Chevron Corp. (NYSE:CVX)

Net Operating Profit After Taxes (NOPAT)

The company's NOPAT displayed significant fluctuations over the reviewed periods. In 2020, it was notably negative at -10,295 million USD, indicating substantial losses. A strong recovery occurred in 2021 with a positive NOPAT of 19,443 million USD, followed by a further increase in 2022 reaching 41,794 million USD, marking the highest profitability in the observed years. However, in 2023, NOPAT declined sharply to 19,473 million USD and showed a slight increase to 20,090 million USD in 2024, yet remaining well below the peak seen in 2022.

Cost of Capital

The cost of capital gradually increased from 13.2% in 2020 to 15.03% in 2022, peaking during this mid-period. It then slightly decreased to 15.01% in 2023 and further to 14.83% in 2024, suggesting a modest lowering of the capital expenses or perceived risk after reaching the high point in 2022.

Invested Capital

The invested capital amount showed relative stability with some moderate fluctuations. Beginning at 197,314 million USD in 2020, it decreased slightly to 193,606 million USD in 2021. From 2021 onward, the invested capital increased to 212,342 million USD in 2022, remaining nearly unchanged at 212,337 million USD in 2023 before slightly decreasing to 208,395 million USD in 2024. This pattern indicates steady capital investment levels with minor adjustments over the years.

Economic Profit

The economic profit figures reflected substantial volatility and a challenging profitability environment relative to the cost of capital. The company reported heavily negative economic profit in 2020 (-36,350 million USD) and 2021 (-8,447 million USD), implying returns were insufficient to cover the cost of invested capital. A positive turnaround appeared in 2022 with an economic profit of 9,889 million USD. However, this improvement was not sustained, as economic profit reverted to negative territory in 2023 (-12,394 million USD) and 2024 (-10,812 million USD), indicating ongoing challenges in generating returns exceeding capital costs.

Summary

The analysis reveals a pattern of recovery after significant losses in 2020, with peak operational profitability in 2022. Despite the temporary peak in financial performance, the company struggled to generate consistent economic profits above its cost of capital in the following years. Invested capital levels have remained relatively stable, while the cost of capital peaked and then moderated slightly. Overall, the financial performance reflects periods of strong profitability intertwined with challenges in sustaining economic value creation beyond capital costs.

The data reveals notable fluctuations in profitability metrics over the observed five-year period. Initially, both net income and net operating profit after taxes (NOPAT) were negative in 2020, indicating a challenging financial environment or operational difficulties that year.

A significant turnaround is apparent in 2021, where both net income and NOPAT transition to positive figures. Net income improves markedly from a loss of 5,543 million US dollars in 2020 to a gain of 15,625 million US dollars in 2021. Similarly, NOPAT moves from a negative 10,295 million US dollars to a positive 19,443 million US dollars. This change suggests improved operational performance and profitability.

The positive trend continues into 2022, with net income reaching its highest point at 35,465 million US dollars and NOPAT following suit with 41,794 million US dollars. This peak indicates a period of especially strong financial results, likely driven by favorable market conditions or operational efficiencies.

Subsequently, both metrics decrease in 2023 but remain positive, with net income declining to 21,369 million US dollars and NOPAT dropping to 19,473 million US dollars. Although reduced from the previous year, these levels still reflect solid profitability.

In 2024, the trend stabilizes with a slight decrease in net income to 17,661 million US dollars, while NOPAT marginally rises to 20,090 million US dollars. The relatively stable results in the final year suggest an adjustment phase or normalization after the previous years' volatility.

Overall Trend

Initially negative performance in 2020, followed by a significant recovery and peak in 2022, then a moderated but stable profitability in subsequent years.

Net Income

Shifted from a substantial loss in 2020 to a peak in 2022, followed by a decline though maintaining positive levels through 2024.

Net Operating Profit After Taxes (NOPAT)

Mirrored the net income pattern with negative values in 2020, peaking in 2022, and settling at stable positive levels thereafter.

Financial Implications

The significant improvements from 2020 to 2022 imply successful management initiatives or external factors favoring profitability, while the subsequent moderate decrease points to normalization or increased market pressures.

The financial data reveals a significant fluctuation in the income tax expense (benefit) over the five-year period ending December 31, 2024. In 2020, a negative income tax expense value indicates a tax benefit, contrasting sharply with subsequent years where the figures show a tax expense. The income tax expense rose markedly from 5,950 million USD in 2021 to a peak of 14,066 million USD in 2022. This was followed by a decline to 8,173 million USD in 2023, and then a slight increase to 9,757 million USD in 2024.

Cash operating taxes exhibit a broadly similar trend to income tax expense, with amounts generally increasing over the period. Starting from 1,885 million USD in 2020, cash operating taxes rose substantially to 5,416 million USD in 2021, nearly doubling to 12,067 million USD in 2022. Thereafter, cash operating taxes decreased to 7,986 million USD in 2023, before modestly rising again to 8,681 million USD in 2024.

Income Tax Expense (Benefit)

Displayed volatility between 2020 and 2024, with a reversal from a tax benefit in 2020 to substantial tax expenses in following years. This indicates varied taxable income or changes in tax-related factors.

Cash Operating Taxes

Demonstrated a consistent upward trajectory from 2020 to 2022, peaking in 2022, followed by a notable decline in 2023 and a partial rebound in 2024, reflecting fluctuations in operational taxable activities or possibly changes in tax rates or policy implementations.

General Observation

The parallel movement of income tax expense and cash operating taxes suggests alignment between accounting reported tax obligations and actual cash tax payments. Both measures peaked in 2022, indicating possibly the highest taxable earnings or less favorable tax conditions during that year, before adjusting downward in 2023 and slightly increasing thereafter.

The data reveals several noteworthy trends across the financial metrics over the five-year period ending December 31, 2024.

Total reported debt & leases

There was a significant reduction in total reported debt and leases from 48,221 million US dollars in 2020 to 27,370 million in 2022. This downward trend continued in 2023 reaching 26,070 million, but there was a slight increase to 29,611 million in 2024. Overall, the company appears to have actively managed its debt, substantially lowering its obligations in the earlier years before a moderate rise in the final year.

Total Chevron Corporation stockholders’ equity

Stockholders' equity showed a consistent upward trajectory from 131,688 million US dollars in 2020 to a peak of 160,957 million in 2023. However, in 2024, equity decreased slightly to 152,318 million. This pattern suggests a generally healthy growth in equity, reflecting retained earnings or increases in capital, with a minor decline in the most recent year which could warrant further examination.

Invested capital

Invested capital experienced fluctuations during the period studied. It started at 197,314 million US dollars in 2020, saw a marginal decline to 193,606 million in 2021, followed by an increase to 212,342 million in 2022. The figure remained virtually unchanged in 2023 at 212,337 million, before slightly decreasing to 208,395 million in 2024. This indicates an overall stable level of capital investment, with periods of both expansion and modest contraction.

In summary, while debt levels decreased significantly in the initial years, there was a rebound in the latest year. Shareholders’ equity grew steadily until a slight pullback in the last year. Invested capital remained relatively stable with minor variations. These trends imply active financial management focusing on reducing leverage and maintaining shareholder value, with some adjustments apparent in the most recent period.

The financial data reveals notable fluctuations in key performance indicators over the five-year period examined. The economic profit experienced significant volatility, moving from a substantial negative value in 2020 to a positive figure in 2022 before reverting to negative territory in the subsequent years.

Economic Profit

The economic profit was deeply negative in 2020 at -36,350 million US dollars, suggesting considerable losses in value creation during that year. There was a marked improvement by 2021, reducing losses to -8,447 million US dollars. A positive economic profit of 9,889 million US dollars was achieved in 2022, indicating a recovery and value addition. However, this improvement was not sustained, as economic profit turned negative again in 2023 (-12,394 million US dollars) and remained negative at a similar level in 2024 (-10,812 million US dollars).

Invested Capital

The invested capital showed a relatively stable trend with mild fluctuations. It decreased slightly from 197,314 million US dollars in 2020 to 193,606 million US dollars in 2021. This was followed by an increase to 212,342 million US dollars in 2022, remaining almost unchanged in 2023 at 212,337 million US dollars. By 2024, it declined slightly to 208,395 million US dollars. Overall, the invested capital did not exhibit drastic changes but showed a modest upward trend through the middle of the period.

Economic Spread Ratio

This ratio, indicative of the difference between the return on invested capital and the cost of capital, mirrored the economic profit trends. It started very negative at -18.42% in 2020, indicating inefficient capital use. The ratio improved significantly to -4.36% in 2021 and turned positive at 4.66% in 2022, aligned with the positive economic profit. However, it reverted to negative values of -5.84% in 2023 and -5.19% in 2024, suggesting a deterioration in capital profitability in the last two years examined.

In summary, the company’s ability to generate economic profit improved notably until 2022 but declined thereafter, reflecting challenges in maintaining value creation. The invested capital remained relatively stable with a slight upward bias, while the economic spread ratio's fluctuations indicate volatility in capital efficiency and returns relative to cost. The negative spreads and economic profits in recent years suggest that the returns on invested capital have not covered the cost of capital, potentially impacting long-term financial sustainability.

The financial data reveals several important trends over the five-year period under review. The company's sales and other operating revenues displayed significant fluctuation, rising substantially from approximately $94.5 billion in 2020 to a peak of about $235.7 billion in 2022. This was followed by a decline in subsequent years, with revenues decreasing to roughly $196.9 billion in 2023 and slightly further to $193.4 billion in 2024. The sharp increase from 2020 to 2022 suggests a period of strong revenue growth, possibly driven by favorable market conditions or operational improvements, while the subsequent decline might indicate challenges such as market saturation, reduced demand, or other external factors affecting sales.

Economic profit

The economic profit figures show notable volatility throughout the period. Initially, the company incurred significant losses in economic profit, with a negative figure of $36.35 billion in 2020, improving sharply in 2021 to a loss of $8.45 billion. Impressively, 2022 saw a transition to positive economic profit of approximately $9.9 billion, indicating a period where the company generated value above its cost of capital. However, this positive trend reversed in 2023 and 2024, with economic profit turning negative again, recording losses of $12.39 billion and $10.81 billion respectively. This pattern reflects a challenging operating environment and suggests fluctuating profitability and efficiency in utilizing capital over time.

Economic profit margin

The economic profit margin aligns closely with the economic profit results, indicating profitability relative to revenue. The margin was deeply negative at -38.48% in 2020, improved significantly to -5.43% in 2021, and turned positive at 4.2% in 2022. This positive margin in 2022 underscores the company's capacity to generate economic value in that year. Nevertheless, the margin deteriorated again to negative values of -6.29% in 2023 and -5.59% in 2024, signaling a return to value destruction relative to sales. The margin trend confirms that despite periods of enhanced profitability, the company has struggled to maintain sustainable economic value creation post-2022.

Overall, the data portrays a volatile performance trajectory, with strong revenue growth peaking in 2022 accompanied by a rare positive economic profit and margin. However, the subsequent downturn in both profit metrics and revenue suggests underlying operational or market difficulties affecting the company’s ability to sustain value creation. The return to negative economic profit and margins in the last two years highlights the need for strategic reassessment to restore consistent profitability and economic value generation.