Chevron Corp. (NYSE:CVX)

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibited substantial volatility over the analyzed years. It began with a significant negative figure in 2020, indicating operational challenges or extraordinary losses. Subsequently, there was a strong recovery in 2021, followed by further growth in 2022 to a peak value of 41,794 million US dollars. This peak was not sustained, as NOPAT decreased sharply in 2023 and stabilized somewhat in 2024 at approximately 20,090 million US dollars, roughly half of the peak in 2022. This pattern suggests recovery after an adverse period, followed by fluctuations potentially due to changing market or operational conditions.

Cost of Capital

The cost of capital progressively increased from 13.24% in 2020 to a high point of 15.07% in 2022. It then remained relatively stable, with a slight decrease noted in 2023 and 2024, ending at 14.87%. This upward trend through 2022 could reflect increased risk premiums or changes in market interest rates, with stabilization possibly indicating a plateau in such financial conditions.

Invested Capital

Invested capital showed a mostly increasing trend from 197,314 million US dollars in 2020 to a peak of 212,342 million in 2022. It remained nearly constant in 2023 and slightly declined in 2024 to 208,395 million. This suggests a moderate expansion of asset base or capital employed through 2022, followed by a cautious scale-back or asset optimization thereafter.

Economic Profit

Economic profit was deeply negative in 2020, with a deficit of 36,419 million US dollars, reflecting the operating losses combined with a higher cost of capital. Although losses reduced significantly in 2021 and turned positive in 2022 with 9,802 million US dollars, economic profit deteriorated back into negative territory in 2023 and 2024, with losses of 12,480 and 10,895 million respectively. This indicates that despite the operational profitability shown by NOPAT in some years, the returns did not consistently exceed the cost of capital, signaling value destruction in certain periods.

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 Trends

The economic profit experienced significant fluctuations over the five-year period. Starting with a substantial loss of -36,419 million US dollars at the end of 2020, the economic profit loss narrowed considerably in 2021 to -8,522 million US dollars. A notable improvement occurred in 2022, with economic profit turning positive to 9,802 million US dollars. However, this positive trend reversed in 2023 and 2024, with losses of -12,480 million and -10,895 million US dollars respectively, indicating a decline in value creation in recent years.

Invested Capital Trends

Invested capital displayed a gradual increasing trend from 2020 to 2022, rising from 197,314 million to 212,342 million US dollars. It then slightly declined and stabilized around 212,337 million in 2023, followed by a small decrease to 208,395 million US dollars in 2024. Overall, the invested capital remained relatively stable with minor fluctuations around the 210 billion US dollars mark in the later years.

Economic Spread Ratio

The economic spread ratio followed a similar pattern to economic profit, starting with a strongly negative figure of -18.46% in 2020. It improved considerably in 2021 to -4.4%, and turned positive at 4.62% in 2022, reflecting improved profitability relative to invested capital. However, the ratio again became negative in the last two years, at -5.88% in 2023 and -5.23% in 2024, indicating that returns on capital fell below the cost of capital during these periods. This suggests challenges in generating sufficient returns to cover investment costs recently.

Overall Analysis

The data reveals a volatile performance profile with a brief recovery in economic profitability in 2022, sandwiched between periods of negative economic profit and spread ratios. Despite stable levels of invested capital, the company struggled to sustain value creation and deliver returns exceeding its capital costs in most years, particularly in the initial and concluding years of the observed period. This pattern indicates underlying operational or market challenges affecting profitability and efficiency of capital utilization.

Sales and Other Operating Revenues

The company experienced a significant increase in sales and other operating revenues from 2020 to 2022. Revenues grew from 94,471 million US$ in 2020 to a peak of 235,717 million US$ in 2022. However, after 2022, revenues declined, reaching 196,913 million US$ in 2023 and further to 193,414 million US$ in 2024. This pattern indicates a strong growth phase followed by a reduction in revenue figures over the last two reported years.

Economic Profit

The economic profit line showed notable fluctuations over the period. It began with a significant negative value of -36,419 million US$ in 2020, indicating large losses. The negative economic profit reduced considerably in 2021 to -8,522 million US$. Impressively, in 2022, the company turned profitable with an economic profit of 9,802 million US$. However, this improvement was not sustained, as economic profit returned to negative values in 2023 (-12,480 million US$) and remained negative in 2024 (-10,895 million US$). This pattern suggests volatility in profitability with a brief period of positive economic profit in 2022.

Economic Profit Margin

The economic profit margin mirrored the trend in economic profit. It was deeply negative at -38.55% in 2020 and improved significantly to -5.48% in 2021. The margin became positive at 4.16% in 2022, confirming the improvement in profitability that year. However, it turned negative again in subsequent years, with margins of -6.34% in 2023 and -5.63% in 2024. This reversal implies challenges in maintaining profitability relative to sales despite the previous year's gains.

Summary of Trends

Overall, the company demonstrated considerable volatility in both revenues and economic profitability. Sales increased sharply until 2022 before declining. Economic profit fluctuated from significant losses in 2020 to gains in 2022, followed by returns to losses. The economic profit margin followed similar patterns, indicating a firm with unstable profitability despite revenue growth during the earlier part of the period. These trends suggest periods of operational or market challenges affecting sustained economic profitability beyond 2022.