Analysis of Investments
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- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Net Profit Margin since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
- Aggregate Accruals
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Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
ConocoPhillips, adjustment to net income
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net income (as reported) | ||||||
| Add: Unrealized holding gain (loss) on securities | ||||||
| Net income (adjusted) |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
Reported net income fluctuated significantly over the five-year period. It increased substantially from 2021 to 2022, then decreased in 2023 and 2024, followed by a slight decrease in 2025. Adjusted net income mirrored this trend, exhibiting similar patterns of increase and decrease, but with smaller absolute differences.
- Net Income Trend
- Reported net income began at US$8,079 million in 2021, rising to a peak of US$18,680 million in 2022. A subsequent decline saw net income fall to US$10,957 million in 2023 and further to US$9,245 million in 2024. The final year observed, 2025, showed a slight decrease to US$7,988 million.
- Adjustment Impact
- The adjustment to net income, stemming from mark-to-market adjustments on available-for-sale securities, was consistently small in magnitude relative to the reported net income. The difference between reported and adjusted net income ranged from US$2 million to US$11 million across the observed period. This suggests that changes in the fair value of available-for-sale securities had a limited impact on overall profitability.
- Consistency of Adjustment
- The adjustments were consistently negative, indicating that unrealized losses on available-for-sale securities were generally recognized during the period. However, the impact of these losses remained relatively stable as a percentage of reported net income. The largest adjustment occurred in 2022, but even then, it represented less than 0.1% of reported net income.
Overall, the primary driver of changes in net income appears to be factors other than mark-to-market adjustments on available-for-sale securities. The adjustments themselves are minor and do not significantly alter the overall profitability picture.
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
ConocoPhillips, adjusted profitability ratios
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The reported and adjusted profitability ratios demonstrate similar trends across the five-year period. Generally, profitability metrics peaked in 2022 before declining through 2025. The adjustments made to net profit and key ratios appear to have a negligible impact on the observed trends, suggesting the adjustments are not materially altering the overall profitability picture.
- Net Profit Margin
- Both the reported and adjusted net profit margins exhibited a substantial increase from 17.63% in 2021 to 23.80% in 2022. Following this peak, a consistent decline is observed, reaching 13.55% and 13.56% respectively by 2025. This indicates a decreasing ability to generate profit from revenue over the latter part of the period.
- Return on Equity (ROE)
- A significant increase in both reported and adjusted ROE occurred between 2021 and 2022, rising from 17.79% to 38.91% and 38.89% respectively. Subsequent years show a marked decrease, with ROE falling to 12.39% for both reported and adjusted figures by 2025. This suggests a diminishing return on shareholder investment.
- Return on Assets (ROA)
- The trend in ROA mirrors that of ROE. Both reported and adjusted ROA increased substantially from 8.91% in 2021 to 19.91% and 19.90% in 2022. A consistent downward trend is then evident, with ROA decreasing to 6.55% for both reported and adjusted values in 2025. This indicates a declining efficiency in utilizing assets to generate profit.
The consistency between reported and adjusted values across all three ratios suggests that the adjustments are not related to significant non-recurring items or accounting changes that would materially impact profitability. The overall trend points to a period of strong profitability in 2022 followed by a sustained decline in subsequent years. Further investigation would be required to determine the underlying drivers of these changes.
ConocoPhillips, Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 Net profit margin = 100 × Net income ÷ Sales and other operating revenues
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income ÷ Sales and other operating revenues
= 100 × ÷ =
The period under review demonstrates significant fluctuations in profitability metrics. Both reported and adjusted net income experienced a substantial increase from 2021 to 2022, followed by a decline through 2025. The adjusted net profit margin closely mirrors the reported net profit margin, indicating that adjustments to net income have a minimal impact on the overall profitability picture.
- Overall Trend
- A clear cyclical pattern is observable. Profit margins peaked in 2022 at 23.80% (reported) and 23.78% (adjusted) before steadily decreasing each subsequent year. By 2025, both margins had fallen to 13.55% and 13.56% respectively, representing a substantial contraction in profitability.
- 2021 to 2022
- The most dramatic change occurred between 2021 and 2022. Both reported and adjusted net income more than doubled, leading to a significant increase in net profit margins. This suggests a period of favorable market conditions or successful operational improvements that substantially boosted profitability.
- 2022 to 2025
- From 2022 through 2025, a consistent downward trend is evident in both net income and profit margins. The decline appears relatively steady, suggesting a gradual erosion of the factors that contributed to the strong performance in 2022. The consistency of the decline across both reported and adjusted figures suggests the underlying causes are related to core business operations rather than accounting adjustments.
- Adjusted vs. Reported Net Profit Margin
- The difference between the reported and adjusted net profit margins is consistently minimal throughout the period, generally remaining within a range of 0.01 to 0.02 percentage points. This indicates that the adjustments made to net income are not materially altering the overall profitability assessment.
In summary, the financial performance exhibited a strong surge in 2022 followed by a consistent decline through 2025. The adjusted net profit margin provides a similar picture to the reported net profit margin, suggesting the core drivers of profitability are consistent and not significantly impacted by adjustments.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 ROE = 100 × Net income ÷ Equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income ÷ Equity
= 100 × ÷ =
The period under review demonstrates significant fluctuations in reported and adjusted net income, which directly influence return on equity (ROE) metrics. While reported and adjusted net income values are nearly identical each year, the resulting ROE figures exhibit a pronounced cyclical pattern.
- Net Income Trends
- Net income experienced substantial growth from 2021 to 2022, increasing from US$8,079 million to US$18,680 million. This was followed by a considerable decline in 2023 to US$10,957 million, and further decreases in 2024 and 2025, reaching US$9,245 million and US$7,988 million respectively. The adjusted net income mirrors this trend closely.
- Reported Return on Equity (ROE)
- Reported ROE mirrored the net income trend. It rose sharply from 17.79% in 2021 to 38.91% in 2022, then decreased to 22.23% in 2023. A continued downward trend is observed in 2024 and 2025, with ROE falling to 14.27% and 12.39% respectively. This suggests a strong correlation between profitability and shareholder returns.
- Adjusted Return on Equity (ROE)
- Adjusted ROE closely follows the pattern of reported ROE. The values are almost identical to the reported ROE for each year, indicating that adjustments to net income have a minimal impact on the overall ROE calculation. The adjusted ROE also peaks at 38.89% in 2022 and declines to 12.39% in 2025, mirroring the net income and reported ROE trends.
The consistency between reported and adjusted ROE suggests that the adjustments made to net income are not materially altering the underlying profitability picture. The overall trend indicates a period of high profitability in 2022 followed by a consistent decline in subsequent years. This decline warrants further investigation to understand the underlying drivers affecting net income and, consequently, shareholder returns.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income ÷ Total assets
= 100 × ÷ =
The period under review demonstrates significant fluctuations in reported and adjusted net income, which directly influence return on assets (ROA) performance. A substantial increase in both reported and adjusted net income is observed between 2021 and 2022, followed by a decline in subsequent years.
- Net Income Trends
- Reported net income increased markedly from US$8,079 million in 2021 to US$18,680 million in 2022. This was mirrored by adjusted net income, moving from US$8,077 million to US$18,669 million over the same period. However, both metrics then decreased, with reported net income falling to US$10,957 million in 2023, US$9,245 million in 2024, and US$7,988 million in 2025. Adjusted net income followed a similar trajectory, reaching US$10,970 million in 2023, US$9,246 million in 2024, and US$7,993 million in 2025.
- Return on Assets (ROA) Performance
- Reported ROA exhibited a corresponding pattern to net income. It rose dramatically from 8.91% in 2021 to 19.91% in 2022, before declining to 11.42% in 2023, 7.53% in 2024, and 6.55% in 2025. Adjusted ROA mirrored these movements precisely, starting at 8.91% in 2021, peaking at 19.90% in 2022, and then decreasing to 11.44% in 2023, 7.53% in 2024, and 6.55% in 2025. The consistency between reported and adjusted ROA suggests that adjustments to net income have a minimal impact on the overall ROA figure.
The substantial increase in ROA from 2021 to 2022 indicates a period of significantly improved profitability relative to asset base. The subsequent decline in ROA from 2022 through 2025 suggests a weakening of this profitability, potentially due to factors such as increased costs, decreased revenues, or changes in asset utilization. The leveling off of ROA at 6.55% in both 2024 and 2025 may indicate a stabilization of performance, although at a considerably lower level than observed in 2022.