Chevron Corp. (NYSE:CVX)

Net Operating Profit After Taxes (NOPAT)

The company experienced significant fluctuations in NOPAT over the examined period. In 2020, NOPAT was notably negative at -10,295 million USD, indicating operational losses. However, a strong recovery occurred in 2021 and 2022, with NOPAT rising to 19,443 million USD and then more than doubling to 41,794 million USD respectively. In 2023 and 2024, NOPAT decreased sharply to approximately 19,473 million USD and 20,090 million USD, showing a stabilization but at a level lower than the peak in 2022.

Cost of Capital

The cost of capital showed a gradual rising trend from 13.03% in 2020 to a peak of 14.82% in 2022. Thereafter, it slightly declined to 14.81% in 2023 and further to 14.63% in 2024. Despite this slight reduction, the cost of capital remained near its elevated level observed in 2022 and 2023.

Invested Capital

The invested capital remained relatively stable throughout the period. There was a minor decline from 197,314 million USD in 2020 to 193,606 million USD in 2021, followed by an increase to 212,342 million USD in 2022, maintaining nearly the same level through 2023 at 212,337 million USD, and slightly decreasing to 208,395 million USD in 2024. Overall, invested capital showed limited volatility compared to profitability measures.

Economic Profit

Economic profit reflected considerable variability and generally negative outcomes. The economic profit was deeply negative at -36,007 million USD in 2020, improving substantially to -8,075 million USD in 2021. It turned positive in 2022 with 10,317 million USD, aligning with the peak in NOPAT. However, economic profit reverted to negative values in 2023 and 2024, at -11,967 million USD and -10,399 million USD respectively. This indicates that despite operational profitability in some years, the returns did not consistently exceed the cost of capital.

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.

Economic Profit

The economic profit demonstrates considerable volatility over the analyzed periods. There was a marked improvement from a significant loss of 36,007 million US dollars in 2020 to a reduced loss of 8,075 million US dollars in 2021. This positive momentum continued into 2022, where the figure transitioned into a profit of 10,317 million US dollars. However, this improvement was not sustained, as economic profit reverted to negative values in 2023 and 2024, with losses of 11,967 million and 10,399 million US dollars respectively, indicating a return to a less favorable economic performance.

Invested Capital

Invested capital experienced moderate fluctuations across the examined years. Starting at 197,314 million US dollars in 2020, the capital slightly decreased to 193,606 million in 2021, followed by an increase to 212,342 million in 2022. The values in 2023 and 2024 remained relatively stable around 212,337 million and 208,395 million US dollars, respectively. Overall, the invested capital shows an upward trend after 2021 with minor fluctuations, reflecting possible reinvestment activities or adjusted asset valuations.

Economic Spread Ratio

The economic spread ratio, expressed in percentage terms, aligns closely with the economic profit trends. It was deeply negative at -18.25% in 2020, improving significantly to -4.17% in 2021. The ratio turned positive to 4.86% in 2022, coinciding with the economic profit turning favorable. Subsequently, it declined to negative values again in 2023 and 2024, recorded at -5.64% and -4.99%, respectively. This pattern suggests that the company's returns on invested capital were insufficient to cover the cost of capital during most of the periods, excluding 2022.

The financial data indicates significant fluctuations in economic profit and related metrics over the examined five-year period. The company experienced a substantial negative economic profit in 2020 with a deficit of $36,007 million, reflecting adverse operating conditions or high costs relative to capital charges.

This economic loss markedly decreased in 2021, improving to a negative figure of $8,075 million, suggesting progress toward operational efficiency or improved market conditions but still representing an economic loss. Remarkably, in 2022, the economic profit turned positive to $10,317 million, indicating a year of strong value creation and potentially superior operating performance or favorable economic factors during that year.

However, the positive trend did not sustain, as economic profit reverted to negative amounts in 2023 and 2024, registering losses of $11,967 million and $10,399 million, respectively. This reversal implies a return to diminished profitability and possibly increased cost pressures or changes in market dynamics impacting value generation negatively.

When observing sales and other operating revenues, there is a pronounced upward trajectory from 2020 through 2022, with revenues increasing from approximately $94.5 billion in 2020 to $235.7 billion in 2022. This suggests a period of strong sales growth, possibly due to higher demand, price increases, or expanded operations. Following the peak in 2022, revenues decreased in 2023 and 2024, falling to around $196.9 billion and $193.4 billion, respectively, indicative of lower sales volumes, pricing pressures, or market contractions.

The economic profit margin similarly tracks this pattern, starting at a significantly negative margin of -38.11% in 2020, improving sharply to -5.19% in 2021, and turning positive at 4.38% in 2022. Despite this recovery, the margin again declines into negative territory at -6.08% in 2023 and -5.38% in 2024, corroborating the reduced profitability seen in economic profit measures.

Overall Trends

There is a clear cyclical pattern of recovery and decline in profitability indicators across the years, with a peak in 2022 marked by positive economic profit and margin, flanked by years of losses.

Revenue Pattern

Revenue growth was robust through 2022, followed by a notable contraction in subsequent years.

Profitability Insights

Despite volatility, the data suggests a challenge in maintaining sustained economic profitability, as the company oscillated between losses and gains over the period examined.

Implications

The financial results point toward external or internal pressures affecting operational efficiency and market conditions post-2022, necessitating strategic or operational adjustments to restore consistent profitability.