ConocoPhillips (NYSE:COP)

Return on Assets (ROA)

The Return on Assets (ROA) demonstrates a significant upward trend from late 2020 through early 2023. Initially negative at -4.31% in December 2020, ROA moved sharply into positive territory by the first quarter of 2021, then increased steadily to reach a peak of approximately 19.91% by December 2022. Following this peak, ROA shows a gradual decline, tapering down to 7.68% by March 2025. This pattern suggests an initial recovery and strong operational efficiency improvements, which later normalize to a moderate level of asset profitability.

Financial Leverage

The Financial Leverage ratio remains relatively stable throughout the entire period. Starting at 2.08 in March 2020, it exhibits minor fluctuations around the range of approximately 1.87 to 2.10 without any clear directional trend. This stability indicates disciplined capital structure management, with no significant changes in the relative amount of debt financing over the observed quarters.

Return on Equity (ROE)

Return on Equity follows a pattern similar to that of ROA but with larger magnitude swings. After a negative value of -9.05% in December 2020, ROE rapidly improves, reaching a high of nearly 38.91% by December 2022. Following this peak, ROE declines steadily to end at 14.63% by March 2025. The greater volatility compared to ROA is consistent with the leverage effect, despite financial leverage remaining stable, indicating increasing efficiency and profitability on shareholders’ equity in the initial period and a moderation in returns thereafter.

Net Profit Margin

The net profit margin exhibited a significant negative value of -14.38% at the end of 2020, reflecting a loss. Subsequently, the margin recovered and improved steadily through 2021 and 2022, reaching a peak around 24.34% to 24.06% in the last quarters of 2022. Afterward, the margin experienced a gradual decline from approximately 23.8% in early 2023 to 16.62% by March 2025, indicating a reduction in profitability but still maintaining positive returns throughout the period.

Asset Turnover

Asset turnover was initially moderate, starting at 0.3 in Q1 2021, then increasing progressively through 2021 and 2022, peaking at 0.84 in Q1 2023. Following this peak, the ratio decreased steadily over the subsequent quarters to 0.45 by March 2025. This pattern suggests an improvement in how efficiently assets were utilized to generate sales until early 2023, after which asset utilization efficiency declined.

Financial Leverage

Financial leverage remained relatively stable over the entire period, ranging between approximately 1.87 and 2.1. The ratio showed a slight downward trend from 2.08 in early 2020 to around 1.9 in the latest periods. This indicates consistent use of debt in the capital structure with marginal fluctuations, suggesting no significant changes in leverage strategy or risk exposure related to financing.

Return on Equity (ROE)

ROE followed a pattern similar to net profit margin, starting with a negative return of -9.05% at the end of 2020. It then showed a strong recovery through 2021 and 2022, peaking above 38% in the late quarters of 2022. Thereafter, ROE decreased steadily, reflecting a gradual reduction in the profitability generated from shareholders' equity, declining to approximately 14.63% by the first quarter of 2025. Despite the decline, the ROE remained positive, indicating continued value creation albeit at a lower rate.

The financial data reveals several noteworthy trends over the periods analyzed, highlighting distinct shifts in efficiency, profitability, and leverage metrics.

Tax Burden

The tax burden ratio exhibits a notable improvement starting from March 31, 2021, where it moves from a low 0.17 to a more stable range around 0.64 to 0.68. This suggests enhanced tax efficiency or changes in tax obligations, maintaining a relatively stable burden thereafter through to March 31, 2025.

Interest Burden

Interest burden shows a significant upward trend beginning in the second quarter of 2021, increasing from 0.13 to remain consistently around 0.95 to 0.97. This indicates reduced interest expenses relative to operating income, reflecting effective management of financing costs or possibly lower debt service requirements over time.

EBIT Margin

EBIT margin displays a marked recovery after a negative margin of -12.67% in 2020, improving steadily to peak figures in the upper 30% range in late 2021 and early 2022. From that peak, a gradual decline is observed through 2023 and into the later quarters, ending near 26%, which still represents a positive margin but suggests some margin compression or operational challenges in the most recent periods.

Asset Turnover

Asset turnover shows a rising trend from 0.27 in mid-2020 to a peak of 0.84 by the end of 2022, indicating improved utilization of assets to generate revenue. However, post-peak, the ratio decreases steadily to approximately 0.45 by early 2025, possibly signaling less efficient asset use or changes in asset base relative to revenue.

Financial Leverage

Financial leverage remains relatively stable across the periods, fluctuating modestly around the 1.9 to 2.05 range without any significant upward or downward trend. This stability implies consistent capital structure management and no major shifts in debt levels relative to equity.

Return on Equity (ROE)

ROE reflects a strong positive turnaround from negative returns in 2020 to a peak exceeding 38% towards the end of 2022. Following this peak, ROE undergoes a gradual decline, settling near 14% by early 2025. Despite the decrease, ROE remains firmly positive, indicating sustained, though moderated, shareholder value creation over time.

Overall, the data suggests that the entity experienced significant operational and financial improvements starting in 2021, highlighted by enhanced margins, efficient asset usage, and higher returns on equity. However, recent periods reveal some regression in profitability and asset efficiency, while leverage and interest costs remain well-managed. This combination points to a phase of stabilization and consolidation following a strong recovery period.

Net Profit Margin

The net profit margin shows a notable transition from negative to positive figures starting in the fourth quarter of 2020, with a margin of -14.38%. Thereafter, it exhibits a steady improvement through 2021, reaching a peak of 24.34% in the third quarter of 2022. Following this peak, there is a gradual decline in net profit margin throughout late 2022 to early 2025, reducing to 16.62% by the first quarter of 2025. This suggests that profitability improved significantly after 2020 but faced pressure leading to a moderate decrease in margin over the subsequent years.

Asset Turnover

Asset turnover starts at low levels in 2020, around 0.3, and shows consistent growth through subsequent quarters. The ratio peaks at 0.84 in the first quarter of 2023, indicating increased efficiency in utilizing assets to generate revenue. Post this peak, the turnover ratio declines gradually over time, dropping to 0.46 by the first quarter of 2025. This trend indicates an initial improvement in asset utilization followed by a modest reduction in efficiency in later periods.

Return on Assets (ROA)

Return on Assets follows a pattern similar to the net profit margin, starting from a negative value of -4.31% in late 2020 and turning positive in early 2021. ROA improves steadily, reaching a high of 19.91% in the first quarter of 2023. After this peak, ROA also experiences a decline, falling to 7.68% by the first quarter of 2025. The initial improvement reflects enhanced profitability relative to asset base, while the subsequent downturn suggests decreasing effectiveness in generating returns from assets in the more recent periods.

Summary of Trends

Overall, the financial ratios demonstrate significant recovery and growth starting from the end of 2020 through early 2023, highlighting improvements in profitability, asset efficiency, and returns. However, post-peak data through 2025 show a gradual downward trend across all three ratios, indicating potential challenges in maintaining elevated levels of profitability and operational efficiency in recent quarters.

Tax Burden

The tax burden ratio shows a notable increase beginning in the first quarter of 2021, rising from 0.17 to levels consistently around 0.64 to 0.68 in subsequent quarters. This ratio has remained relatively stable thereafter, fluctuating narrowly between 0.63 and 0.68 through to the first quarter of 2025. The stability indicates a consistent tax impact on pre-tax earnings over the observed periods.

Interest Burden

The interest burden ratio demonstrates a significant improvement starting in early 2021, rising sharply from 0.13 to approximately 0.79 and continuing upward to stabilize around 0.95 to 0.97. From the second quarter of 2021 through the first quarter of 2025, the ratio remains nearly constant. This suggests a substantial reduction in interest expenses relative to EBIT, indicating improved interest expense management or reduced debt levels.

EBIT Margin

The EBIT margin experienced a marked turnaround beginning in 2020, recovering from a negative margin of -12.67% in the last quarter of 2020 to a positive and rising trend into 2021. It peaked around the second to fourth quarters of 2022 with margins exceeding 37%, representing strong operational profitability. Since then, there has been a gradual decline in EBIT margin through the end of 2024, settling near 26%, which may indicate some pressure on profitability but still maintaining strong earnings relative to revenues.

Asset Turnover

Asset turnover shows an upward trend from 0.3 in early 2021 to a peak of 0.84 in the first quarter of 2023, demonstrating improved efficiency in using assets to generate revenue over this period. However, starting from mid-2023, asset turnover declines noticeably to around 0.45 by early 2025. This deceleration in asset utilization efficiency may suggest challenges in maintaining sales growth relative to asset base expansion or asset usage optimization.

Return on Assets (ROA)

ROA mirrors improvements initially seen in EBIT margin and asset turnover, rising from deeply negative levels in 2020 to nearly 20% by the end of 2022, indicative of significantly improved overall profitability and efficient asset use. Following this peak, ROA gradually decreases to approximately 7.6% by the first quarter of 2025. This decline, though substantial, still reflects positive returns on asset investment but signals a reduction in overall asset profitability compared to the peak period.

Tax Burden

The Tax Burden ratio shows a noticeable increase starting from 0.17 in March 2021 to a relatively stable range between 0.63 and 0.68 in subsequent periods. This suggests an improvement in tax efficiency or a stabilization of tax expenses relative to pre-tax income over time from mid-2021 onwards.

Interest Burden

The Interest Burden ratio also demonstrates significant improvement, rising from 0.13 in March 2021 to consistently high levels around 0.95 to 0.97 through to March 2025. This indicates a substantial reduction in interest expense impact on earnings, reflecting lower interest costs or improved operational income to cover interest expenses.

EBIT Margin

The EBIT Margin underwent considerable positive change. Beginning with a negative margin of -12.67% in December 2020, it increased sharply to 4.23% by March 2021, and continued rising to peak values near 37.54% by December 2022. This value then gradually declined, settling around 26.3% by March 2025. The trend reflects strong operational performance improvement, followed by a moderate margin compression in the later periods.

Net Profit Margin

The Net Profit Margin mirrored the positive trend seen in EBIT Margin, initially heavily negative at -14.38% in December 2020 but turning positive at 0.09% by March 2021. It then steadily rose to nearly 24.3% by September 2022. Afterwards, it experienced a gradual decline to approximately 16.6% by March 2025. This suggests initial losses were reversed and profitability improved markedly, with a slight trend towards margin reduction thereafter, possibly due to increased costs or other financial pressures.