Chevron Corp. (NYSE:CVX)

Net Operating Profit After Taxes (NOPAT)

The NOPAT value shows a significant recovery from a negative figure of -10,295 million US dollars in 2020 to a positive peak of 41,794 million US dollars in 2022. However, this is followed by a decline to 19,473 million in 2023 and a slight increase to 20,090 million in 2024, indicating volatility and a downward adjustment after the 2022 high.

Cost of Capital

The cost of capital steadily increases from 13.03% in 2020 to a peak of 14.82% in 2022 before experiencing a slight decline to 14.62% by 2024. This trend suggests rising capital costs until 2022, after which there is some easing.

Invested Capital

Invested capital remains relatively stable with a slight downward trend, moving from 197,314 million US dollars in 2020 to 208,395 million in 2024. The capital investment peaked in 2022 and 2023 around 212,342 million and 212,337 million respectively before declining slightly by 2024.

Economic Profit

The economic profit is consistently negative except for 2022, where it shows a positive value of 10,331 million US dollars. The negative economic profit values in other years, notably a large negative figure in 2020 (-35,995 million) and substantial negatives in 2023 and 2024 (-11,953 million and -10,385 million respectively), imply that the returns did not exceed the cost of capital in those years, highlighting challenges in value creation outside the 2022 exceptional period.

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 over the five-year period demonstrates variability and some concerning indicators in economic profitability and returns on invested capital.

Economic Profit

The company experienced significant negative economic profit in 2020, with a loss of 35,995 million USD. There was substantial improvement in 2021, reducing the loss to 8,062 million USD. In 2022, economic profit turned positive, reaching 10,331 million USD, indicating a period of value creation. However, this gain was not sustained, as the company returned to negative economic profits in 2023 and 2024, with losses of 11,953 million USD and 10,385 million USD respectively. This pattern suggests volatility and inconsistency in generating returns above the cost of capital.

Invested Capital

The invested capital shows relatively stable values across the five years, starting at 197,314 million USD in 2020 and slightly increasing to a peak of 212,342 million USD in 2022, before settling around 208,395 million USD in 2024. This stability indicates limited changes in the capital base underpinning the company’s operations during the period.

Economic Spread Ratio

The economic spread ratio, reflecting the return spread over the cost of capital, mirrors the trend seen in economic profit. It was strongly negative in 2020 at -18.24%, improved significantly in 2021 to -4.16%, and turned positive at 4.87% in 2022. The ratio reverted to negative figures in 2023 and 2024, at -5.63% and -4.98% respectively. This further confirms the company’s struggle to maintain returns consistently above the cost of capital.

Overall, the data reveals a cyclical pattern with an improvement in financial performance in 2022, but a reversion to negative economic returns thereafter. The invested capital base remained fairly steady, emphasizing that fluctuations in economic profit and spread arise primarily from operational performance and market conditions rather than changes in the capital employed.

Economic Profit

The economic profit demonstrated significant volatility over the analyzed period. Initially, there was a considerable negative economic profit of -35,995 million US dollars at the end of 2020, indicating substantial value destruction. This negative trend improved markedly by the end of 2021 with a reduced loss of -8,062 million US dollars. The company then transitioned to a positive economic profit of 10,331 million US dollars by the end of 2022, reflecting a period of value creation. However, this positive gain was not sustained, as economic profit declined again, showing negative values of -11,953 million US dollars in 2023 and -10,385 million US dollars in 2024, suggesting renewed challenges in generating economic value.

Sales and Other Operating Revenues

Sales and other operating revenues increased substantially from 94,471 million US dollars at the end of 2020 to a peak of 235,717 million US dollars at the end of 2022. This represents a strong upward trend in top-line performance, more than doubling within two years. However, there was a decline in revenue in the subsequent two years, dropping to 196,913 million US dollars in 2023 and further to 193,414 million US dollars in 2024. Despite the decline after 2022, the revenue levels in 2023 and 2024 remained significantly above those recorded at the beginning of the period.

Economic Profit Margin

The economic profit margin followed a similar pattern to economic profit itself. It was negative and steeply declining at -38.1% in 2020, improving profoundly to -5.18% in 2021. By 2022, the margin turned positive at 4.38%, aligning with the positive economic profit noted in that year. In the subsequent years, the margin again reverted to negative figures, standing at -6.07% in 2023 and -5.37% in 2024, pointing to reduced efficiency or increased cost pressures impacting profitability despite relatively high revenues.