Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Devon Energy Corp., profitability ratios
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The profitability profile from 2018 to 2022 is characterized by a severe contraction during the 2019-2020 period followed by a robust recovery and expansion in 2021 and 2022. This V-shaped trajectory is evident across all measured ratios, with 2022 performance levels generally exceeding the 2018 baseline.
- Profitability Margins
- Gross profit margin exhibited the most resilience, experiencing a slight dip between 2018 and 2020 before climbing sharply to a peak of 55.26% in 2022. Operating and net profit margins showed significantly higher volatility; both metrics collapsed in 2020, with operating margin reaching -58.41% and net margin reaching -55.51%. However, a strong recovery ensued, with the operating profit margin reaching 42.17% and the net profit margin reaching 31.38% by the end of 2022.
- Returns on Capital and Assets
- Return on Equity (ROE) and Return on Assets (ROA) mirrored the volatility of the profit margins. ROE experienced an extreme decline from 33.36% in 2018 to -92.89% in 2020, before surging to 53.86% in 2022, indicating a substantial recovery in shareholder value generation. ROA followed a similar pattern, dropping to -27.04% in 2020 and rebounding to 25.36% in 2022, reflecting a significant improvement in the efficiency of asset utilization over the final two years of the period.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Gross Profit Margin
Devon Energy Corp., gross profit margin calculation
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × 10,592 ÷ 19,169 = 55.26%
The profitability metrics from 2018 to 2022 exhibit a significant V-shaped recovery, characterized by a period of contraction followed by an aggressive expansion phase.
- Revenue and Gross Profit Trajectory
- A consistent decline in both revenue and gross profit is observed between 2018 and 2020. Revenues decreased from 10,734 million US$ to 4,828 million US$, while gross profit fell from 4,146 million US$ to 1,692 million US$. This trend reversed abruptly in 2021, with revenues climbing to 12,206 million US$ and gross profit reaching 5,837 million US$. By the end of 2022, these figures escalated to 19,169 million US$ in revenue and 10,592 million US$ in gross profit, representing a substantial increase over 2018 baseline levels.
- Gross Profit Margin Analysis
- The gross profit margin remained relatively stable during the contraction phase, shifting from 38.62% in 2018 to 35.05% in 2020. However, a period of rapid margin expansion occurred beginning in 2021, where the ratio rose to 47.82%. This upward trajectory culminated in a peak of 55.26% in 2022. This expansion indicates that revenue growth significantly outpaced the growth of the cost of goods sold during the final two years of the period analyzed, suggesting enhanced pricing power or improved operational efficiencies.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Operating Profit Margin
Devon Energy Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income (loss) | 8,084) | 3,227) | (2,820) | 141) | 1,514) | |
| Revenues | 19,169) | 12,206) | 4,828) | 6,220) | 10,734) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 42.17% | 26.44% | -58.41% | 2.27% | 14.10% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Chevron Corp. | 21.42% | 14.81% | — | — | — | |
| ConocoPhillips | 36.80% | 29.84% | — | — | — | |
| Exxon Mobil Corp. | 19.82% | 11.91% | — | — | — | |
| Operating Profit Margin, Sector | ||||||
| Oil, Gas & Consumable Fuels | 22.22% | 14.57% | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Energy | 21.94% | 14.46% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Operating profit margin = 100 × Operating income (loss) ÷ Revenues
= 100 × 8,084 ÷ 19,169 = 42.17%
2 Click competitor name to see calculations.
The operating performance from 2018 through 2022 is characterized by extreme volatility, featuring a period of sharp contraction followed by an aggressive recovery and expansion in profitability.
- Revenue and Operating Income Trends
- A significant downward trajectory is observed between 2018 and 2020, as revenues fell from US$ 10,734 million to US$ 4,828 million. This decline coincided with a collapse in operating income, which moved from a profit of US$ 1,514 million in 2018 to an operating loss of US$ 2,820 million in 2020. This trend reversed sharply in 2021, with revenues ascending to US$ 12,206 million and operating income returning to a positive US$ 3,227 million, culminating in a peak of US$ 19,169 million in revenue and US$ 8,084 million in operating income by 2022.
- Operating Profit Margin Analysis
- The operating profit margin exhibited severe fluctuations, beginning at 14.10% in 2018 and eroding to 2.27% in 2019. The margin reached its lowest point in 2020 at -58.41%, indicating that operating costs substantially exceeded generated revenues. A rapid recovery followed, with the margin expanding to 26.44% in 2021 and further increasing to 42.17% in 2022.
- Operational Efficiency and Leverage
- The transition from a deeply negative margin in 2020 to a high of 42.17% in 2022 suggests a substantial improvement in operational leverage. The magnitude of the margin expansion in the final two years indicates that revenue growth occurred at a significantly faster rate than the growth of operating expenses, resulting in an accelerated conversion of sales into operating profit.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Net Profit Margin
Devon Energy Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings (loss) attributable to Devon | 6,015) | 2,813) | (2,680) | (355) | 3,064) | |
| Revenues | 19,169) | 12,206) | 4,828) | 6,220) | 10,734) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 31.38% | 23.05% | -55.51% | -5.71% | 28.54% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Chevron Corp. | 15.05% | 10.04% | — | — | — | |
| ConocoPhillips | 23.80% | 17.63% | — | — | — | |
| Exxon Mobil Corp. | 13.98% | 8.33% | — | — | — | |
| Net Profit Margin, Sector | ||||||
| Oil, Gas & Consumable Fuels | 15.41% | 9.78% | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Energy | 15.29% | 9.70% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net profit margin = 100 × Net earnings (loss) attributable to Devon ÷ Revenues
= 100 × 6,015 ÷ 19,169 = 31.38%
2 Click competitor name to see calculations.
The financial performance over the five-year period characterized by the analyzed data exhibits extreme volatility in both top-line revenue and bottom-line profitability. A significant period of contraction and losses between 2019 and 2020 was followed by a rapid and substantial recovery phase in 2021 and 2022.
- Revenue Trends
- A sharp downward trajectory in revenues is observed from 2018 to 2020, with figures falling from 10,734 million USD to a low of 4,828 million USD. This decline was reversed starting in 2021, with revenues expanding rapidly to reach 19,169 million USD by December 31, 2022, representing a significant increase over the 2018 baseline.
- Net Profit Margin Analysis
- The net profit margin experienced severe fluctuations, shifting from a positive 28.54% in 2018 to a deep negative position of -55.51% in 2020. This contraction indicates that expenses significantly exceeded revenues during the 2020 fiscal year. A strong recovery is evident in 2021 as the margin returned to 23.05%, eventually peaking at 31.38% in 2022, which marks the highest profitability level within the observed period.
- Net Earnings Performance
- Earnings followed a V-shaped pattern, moving from a profit of 3,064 million USD in 2018 to a peak loss of 2,680 million USD in 2020. The subsequent turnaround was aggressive, with net earnings climbing to 2,813 million USD in 2021 and further increasing to 6,015 million USD in 2022. This trajectory demonstrates a high degree of sensitivity to market conditions and a robust capacity for earnings recovery.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Return on Equity (ROE)
Devon Energy Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings (loss) attributable to Devon | 6,015) | 2,813) | (2,680) | (355) | 3,064) | |
| Stockholders’ equity attributable to Devon | 11,167) | 9,262) | 2,885) | 5,802) | 9,186) | |
| Profitability Ratio | ||||||
| ROE1 | 53.86% | 30.37% | -92.89% | -6.12% | 33.36% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Chevron Corp. | 22.27% | 11.24% | — | — | — | |
| ConocoPhillips | 38.91% | 17.79% | — | — | — | |
| Exxon Mobil Corp. | 28.58% | 13.67% | — | — | — | |
| ROE, Sector | ||||||
| Oil, Gas & Consumable Fuels | 27.31% | 13.24% | — | — | — | |
| ROE, Industry | ||||||
| Energy | 26.98% | 13.21% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
ROE = 100 × Net earnings (loss) attributable to Devon ÷ Stockholders’ equity attributable to Devon
= 100 × 6,015 ÷ 11,167 = 53.86%
2 Click competitor name to see calculations.
The financial performance from 2018 to 2022 is characterized by extreme volatility, featuring a severe contraction in profitability during the middle of the period followed by a robust recovery and expansion.
- Net Earnings Trend
- Net earnings transitioned from a profit of 3,064 million in 2018 to consecutive losses in 2019 and 2020, with the latter reaching a deficit of 2,680 million. A sharp reversal occurred in 2021, with earnings returning to 2,813 million, and further accelerating to a period high of 6,015 million in 2022.
- Stockholders' Equity Fluctuations
- Equity levels experienced a significant decline between 2018 and 2020, falling from 9,186 million to 2,885 million. This erosion aligned with the period of net losses. Subsequently, equity grew rapidly, exceeding pre-crisis levels to reach 11,167 million by the end of 2022.
- Return on Equity (ROE) Analysis
- The ROE exhibited a dramatic swing, plummeting from 33.36% in 2018 to a low of -92.89% in 2020, indicating a severe impact on shareholder value during that fiscal year. The ratio rebounded to 30.37% in 2021 and surged to 53.86% in 2022, demonstrating a substantial improvement in capital efficiency and profitability relative to equity.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Return on Assets (ROA)
Devon Energy Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings (loss) attributable to Devon | 6,015) | 2,813) | (2,680) | (355) | 3,064) | |
| Total assets | 23,721) | 21,025) | 9,912) | 13,717) | 19,566) | |
| Profitability Ratio | ||||||
| ROA1 | 25.36% | 13.38% | -27.04% | -2.59% | 15.66% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Chevron Corp. | 13.76% | 6.52% | — | — | — | |
| ConocoPhillips | 19.91% | 8.91% | — | — | — | |
| Exxon Mobil Corp. | 15.10% | 6.80% | — | — | — | |
| ROA, Sector | ||||||
| Oil, Gas & Consumable Fuels | 15.25% | 6.99% | — | — | — | |
| ROA, Industry | ||||||
| Energy | 14.84% | 6.84% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
ROA = 100 × Net earnings (loss) attributable to Devon ÷ Total assets
= 100 × 6,015 ÷ 23,721 = 25.36%
2 Click competitor name to see calculations.
The financial performance from 2018 to 2022 is characterized by extreme volatility in both profitability and the asset base, reflecting a severe cyclical downturn followed by a robust recovery.
- Return on Assets (ROA) Volatility
- The ROA experienced a sharp decline from 15.66% in 2018 to a trough of -27.04% in 2020. This downward trajectory indicates a period where assets failed to generate positive returns, resulting in significant negative profitability. A rapid reversal occurred in 2021 and 2022, with the ratio climbing to 13.38% and eventually peaking at 25.36%, representing a substantial improvement in asset utilization and earning efficiency.
- Net Earnings Trends
- The fluctuations in ROA are directly correlated with the instability of net earnings. Earnings transitioned from a profit of 3,064 million USD in 2018 to a substantial loss of 2,680 million USD by 2020. The recovery phase was marked by a surge in profitability, with net earnings reaching 6,015 million USD in 2022, which served as the primary driver for the expanded ROA.
- Asset Base Dynamics
- Total assets exhibited a contraction during the period of loss, decreasing from 19,566 million USD in 2018 to a low of 9,912 million USD in 2020. This was followed by an aggressive expansion of the asset base to 23,721 million USD by 2022. Notably, the increase in ROA during 2022 occurred despite the growth in total assets, indicating that the growth in net earnings significantly outpaced the expansion of the asset base.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?