Chevron Corp. (NYSE:CVX)

Net Operating Profit After Taxes (NOPAT)

The NOPAT showed a significant negative value in 2020, indicating a substantial loss. However, it improved remarkably in 2021, turning positive and continuing to increase sharply in 2022. In 2023 and 2024, the NOPAT values stabilized, maintaining positive figures but at lower levels compared to 2022. This indicates a recovery phase followed by a period of steady, yet moderated profitability.

Cost of Capital

The cost of capital exhibited an upward trend from 13% in 2020 to a peak of approximately 14.79% in 2022. Thereafter, it slightly declined, settling around 14.6% by 2024. This suggests an overall increase in the risk or required return over the period, with a minor easing in the most recent years.

Invested Capital

Invested capital remained relatively stable from 2020 to 2021, with a slight decrease. It then increased notably in 2022 and remained almost unchanged in 2023. There was a modest decrease in 2024. This pattern shows initial capital preservation, followed by a period of increased investment and then slight retrenchment, possibly reflecting adjustments in strategic asset allocation.

Economic Profit

Economic profit was deeply negative in 2020, indicating value destruction. It improved significantly by 2021 and turned positive in 2022, signaling value creation during that year. However, in 2023 and 2024, economic profit reverted to negative values, suggesting that despite positive accounting profits, the returns may not have sufficiently exceeded the cost of capital in recent years.

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 analysis of the annual financial data reveals several notable trends and fluctuations in key performance indicators over the five-year period.

Economic Profit

The economic profit shows significant volatility during the period. It starts with a substantial negative value of -35,950 million US dollars in 2020, improving markedly to -8,013 million in 2021. The year 2022 represents a positive turnaround with economic profit reaching 10,388 million US dollars, indicating a period of improved profitability or value creation. However, the subsequent years 2023 and 2024 see a reversal back into negative territory with values of -11,896 million and -10,330 million US dollars respectively. This downward shift after 2022 suggests challenges in sustaining profitable operations or generating returns above cost of capital in the latter years.

Invested Capital

Invested capital shows a generally steady trajectory with minor fluctuations. The value decreases slightly from 197,314 million US dollars in 2020 to 193,606 million in 2021, followed by a notable increase to 212,342 million in 2022. The invested capital remains relatively stable in the next two years, with a slight decrease to 212,337 million in 2023 and a further drop to 208,395 million in 2024. This trend suggests that the company maintained substantial asset base or capital deployment throughout the period with minor retractions.

Economic Spread Ratio

The economic spread ratio, which serves as an indicator of return over the cost of capital, mirrors the fluctuations observed in economic profit. It starts with a highly negative figure of -18.22% in 2020, improves significantly to -4.14% in 2021, and then turns positive to 4.89% in 2022, indicating a period where returns exceeded costs. However, the ratio slips back to negative values in 2023 and 2024 at -5.6% and -4.96% respectively, highlighting a decline in economic value generation during these years.

In summary, the data shows a period of recovery and positive economic performance in 2022 following significant losses and negative returns in earlier years. However, this positive phase was short-lived as the company reverted to generating negative economic profit and spread ratios in the subsequent years. Despite these fluctuations, invested capital remained relatively stable, suggesting consistent capital investment or asset levels during this period. The overall trend indicates challenges in sustaining economic profit beyond 2022 within the observed timeframe.

The analysis of the annual financial data reveals several notable trends in the financial performance over the five-year period.

Economic Profit

The economic profit exhibited significant volatility during the period. It started with a substantial negative value of -35,950 million US dollars in 2020, indicating a considerable loss relative to the cost of capital. In 2021, this loss sharply decreased to -8,013 million US dollars. The company then achieved a positive economic profit of 10,388 million US dollars in 2022, reflecting an improvement in creating value above the cost of capital. However, the subsequent years saw a reversal, with economic profit returning to negative figures: -11,896 million US dollars in 2023 and -10,330 million US dollars in 2024. This pattern suggests challenges in sustaining value creation in the latter years.

Sales and Other Operating Revenues

Revenues showed a pronounced upward trend from 2020 through 2022, increasing from 94,471 million US dollars to a peak of 235,717 million US dollars. This nearly two-and-a-half-fold increase reflects strong top-line growth. However, revenues declined in 2023 and 2024, falling to 196,913 million and 193,414 million US dollars respectively. Despite the downturn, revenue levels in these years remained significantly higher than those in 2020 and 2021, indicating a notable overall growth over the period.

Economic Profit Margin

The economic profit margin, which indicates the proportion of economic profit relative to revenues, mirrored the volatility seen in economic profit. It was deeply negative in 2020 at -38.05%, improved steadily to a near breakeven margin of -5.15% in 2021, and turned positive at 4.41% in 2022. The margin then deteriorated again, returning to negative values of -6.04% in 2023 and -5.34% in 2024. This fluctuation underscores challenges in maintaining profitability adjusted for capital cost despite strong revenue growth.