DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
Quarterly Data
Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.
Paying user area
Try for free
Devon Energy Corp. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Dividend Discount Model (DDM)
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Aggregate Accruals
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Devon Energy Corp. for $22.49.
This is a one-time payment. There is no automatic renewal.
We accept:
Two-Component Disaggregation of ROE
Devon Energy Corp., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
- Return on Assets (ROA)
- The ROA displayed a notable volatility over the analyzed periods. Initially, it exhibited strong positive performance in early 2019, with values peaking at 23.21% in the second quarter of 2019. This was followed by a sharp decline starting at the end of 2019, reaching significant negative lows around the middle of 2020, with the lowest point near -31.18%. Thereafter, ROA began a recovery trend starting in late 2020, moving into positive territory by early 2021 and continuing to improve consistently through 2022, peaking around 26.83%. However, in 2023, there is a slight downward trend from the previous peak, with values declining to 15.66% by the third quarter.
- Financial Leverage
- Financial leverage showed a relatively stable but cycling pattern throughout the periods. It started around 2.3 in early 2019, increasing to a peak of approximately 3.44 in late 2020, suggesting a period of higher indebtedness or more aggressive capital structure. Following this peak, a gradual and steady decrease in financial leverage was observed, falling to near 2.08 by the third quarter of 2023. This trend suggests a reduction in reliance on debt or a strengthening equity base as the company moved through 2021 and beyond.
- Return on Equity (ROE)
- ROE mirrored the patterns seen in ROA but with greater amplitude, indicating heightened sensitivity to changes in profitability and leverage. Early 2019 showed very strong returns, peaking at 55.25% mid-year. This was followed by a severe decline that turned sharply negative through 2020, with the lowest point near -106.52%, reflecting significant operational and financial challenges during that period. Starting early 2021, ROE rebounded sharply, demonstrating robust recovery and growing profitability, reaching an apex at 58.13% by late 2022. However, there is a noticeable decline in 2023, with ROE falling to approximately 32.61% by the third quarter, suggesting either reduced profitability or changing leverage impacts.
- Overall Trends and Insights
- The company experienced a volatile performance cycle from 2019 through 2023. The trough period around mid-2020 is clearly marked by negative returns on assets and equity, aligned with an increased financial leverage, implying stress from external or internal factors affecting profitability and risk exposure. From late 2020 onward, a recovery trend is evident in both profitability metrics alongside a gradual deleveraging strategy, which likely contributed to improved returns and financial stability. The moderate decline in profitability indicators during 2023 warrants attention as it may reflect emerging challenges or a shift in operational efficiency. The interplay of leverage and return metrics suggests an ongoing focus on optimizing capital structure to support sustainable growth.
Three-Component Disaggregation of ROE
Devon Energy Corp., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
- Net Profit Margin
- The net profit margin exhibited significant volatility over the observed quarters. Initially, it showed strong positive values, peaking at over 42% in mid-2019, before sharply declining into negative territory throughout 2020. The margin reached a trough near -63% in late 2020, indicative of substantial losses during that period. Recovery began in 2021, with margins gradually improving and stabilizing above 20% in 2022. However, a gradual downward trend resumed in 2023, with the margin declining from approximately 31% to around 25% by the latest quarter.
- Asset Turnover
- Asset turnover ratios fluctuated mildly during the periods, with a notable dip in early 2021 that marked the lowest values around 0.22. Following this low, the ratio steadily increased, reaching a peak of 0.82 by late 2022, before experiencing a moderate decline to 0.64 by the third quarter of 2023. The general pattern suggests a recovery in operational efficiency after a downturn, with asset utilization improving substantially in the latter part of the timeline.
- Financial Leverage
- Financial leverage ratios demonstrated an increasing trend during 2020, peaking at above 3.4, which implies heightened use of debt or other financial obligations. Post-2020, the leverage ratio consistently decreased, dropping from about 2.45 in early 2021 to just above 2.0 in 2023. This decline indicates a reduction in financial risk or indebtedness, potentially reflecting deleveraging efforts or improved capital structure management in recent quarters.
- Return on Equity (ROE)
- ROE followed a pattern largely mirroring that of net profit margin, with robust positive returns early in the observed period, peaking above 55% in mid-2019. It then sharply dropped into deeply negative values through 2020, reaching a nadir near -107% in late 2020. Subsequent quarters showed a remarkable recovery, with ROE climbing steadily throughout 2021 and 2022 to peak near 58%. However, a decreasing trend is present in 2023, where ROE declined to just above 32% by the latest quarter. This movement reflects significant fluctuations in profitability relative to shareholder equity over the analysis period.
Two-Component Disaggregation of ROA
Devon Energy Corp., decomposition of ROA (quarterly data)
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
- Net Profit Margin
- The net profit margin displayed considerable volatility throughout the observed periods. Initially, it started at a strong positive level of around 30.62% in early 2019 and increased to 42.13% by mid-2019. This was followed by a decrease and eventual shift into negative territory by the end of 2019 and throughout 2020, reaching a low point of approximately -62.68%. From early 2021 onward, the margin showed a recovery trend, turning positive and steadily improving to peak around 32.53% in late 2022 before experiencing a slight moderation to about 24.63% by the third quarter of 2023. This pattern indicates significant challenges during 2020, but a recovery phase with improving profitability thereafter.
- Asset Turnover
- Asset turnover demonstrated fluctuations with a general upward trend over the period. Initially recorded at 0.53 in the first quarter of 2019, it increased moderately to 0.58 by the third quarter of 2019 before dropping to around 0.45 by the end of that year. In 2020, asset turnover showed some instability, dropping and recovering between 0.49 and 0.65. Starting 2021, a noticeable upward trend began, peaking at 0.82 in the third quarter of 2022, followed by a mild decline to 0.64 by the last observed quarter. The improved turnover in recent years suggests more efficient use of assets to generate revenue after a period of inconsistency.
- Return on Assets (ROA)
- Return on assets mirrored the trends seen in net profit margin and asset turnover, indicating a correlation among these metrics. ROA started positively at 16.29% in early 2019, rose sharply to 23.21% mid-year, but then fell into negative territory by the end of 2019 continuing into 2020, with the lowest point near -31.18%. Recovery began in 2021, with ROA gradually increasing, reaching a high of 26.83% in late 2022. Following this peak, there was a moderation down to 15.66% by the third quarter of 2023. The recovery and subsequent stabilization reflect improvement in operational efficiency and profitability, though with some recent moderation.