Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Current Ratio since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Debt
- Aggregate Accruals
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Profitability Ratios (Summary)
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).
- Gross Profit Margin
- The gross profit margin exhibited an overall increasing trend from 2018 to 2022, beginning at 38.62% in 2018 and slightly declining to 35.05% in 2020. This was followed by a significant rise to 47.82% in 2021 and further to 55.26% in 2022, indicating improved efficiency in production or cost management over the period.
- Operating Profit Margin
- The operating profit margin showed considerable volatility. Starting at 14.1% in 2018, it dropped sharply to 2.27% in 2019 and then plunged into negative territory at -58.41% in 2020. Recovery was evident thereafter, with margins improving markedly to 26.44% in 2021 and 42.17% in 2022. This suggests challenges in operating efficiency or cost control around 2020, followed by a strong operational recovery.
- Net Profit Margin
- Net profit margin followed a pattern similar to the operating margin. It declined from 28.54% in 2018 to negative values of -5.71% in 2019 and -55.51% in 2020. Subsequently, the margin recovered to positive territory, reaching 23.05% in 2021 and further improving to 31.38% in 2022. This indicates that the company faced significant profitability challenges during 2019 and 2020, with a notable turnaround in the following years.
- Return on Equity (ROE)
- ROE demonstrated a dramatic downturn and subsequent recovery. It started at a robust 33.36% in 2018, fell into negative values of -6.12% in 2019 and a steep decline to -92.89% in 2020. However, the company rebounded strongly in 2021 and 2022 with ROE values of 30.37% and 53.86%, respectively. This indicates volatility in shareholder returns, with the worst performance in 2020, followed by exceptional recovery.
- Return on Assets (ROA)
- The return on assets showed a downward trend from 15.66% in 2018 to negative -27.04% in 2020. It then reversed course, improving to 13.38% in 2021 and further to 25.36% by 2022. This trend reflects fluctuations in the efficiency of asset utilization, with significant deterioration during the middle years and recovery in recent periods.
Return on Sales
Return on Investment
Gross Profit Margin
Devon Energy Corp., gross profit margin calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
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 × ÷ =
- Gross Profit
- Gross profit exhibited a notable volatility over the five-year period. It decreased significantly from 4,146 million US dollars in 2018 to 1,692 million US dollars in 2020, showing a sharp contraction. However, starting from 2021, there was a pronounced recovery, with gross profit rising sharply to 5,837 million US dollars, and then nearly doubling to 10,592 million US dollars by the end of 2022.
- Revenues
- Revenues mirrored the general pattern observed in gross profit, with a decrease from 10,734 million US dollars in 2018 to 4,828 million US dollars in 2020. Following this low point, revenues reversed the downward trend, increasing asymmetrically to 12,206 million US dollars in 2021 and subsequently reaching 19,169 million US dollars in 2022. The revenue growth in the final two years was substantial, surpassing the initial 2018 levels.
- Gross Profit Margin
- Gross profit margin demonstrated a declining trend from 38.62% in 2018 to a low of 35.05% in 2020. This decline reflected decreasing profitability relative to revenues during the initial years analyzed. From 2021 onward, the margin improved sharply, increasing to 47.82% and further rising to 55.26% in 2022. This improvement indicates enhanced operational efficiency or favorable pricing conditions that significantly increased profitability per unit of revenue.
- Overall Analysis
- The data reveals a period of financial challenge between 2018 and 2020 characterized by declines in both absolute gross profit and revenues, coupled with contracting profit margins. This may reflect adverse market conditions or internal operational issues during that timeframe. From 2021, there is a clear strong recovery and growth phase, with substantial increases in revenues and gross profits, alongside a marked expansion in gross profit margins. The rapid improvement in profitability metrics in the latter years suggests strategic or market developments that positively impacted the company’s financial performance.
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) | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
| Operating Profit Margin, Sector | ||||||
| Oil, Gas & Consumable Fuels | ||||||
| Operating Profit Margin, Industry | ||||||
| Energy | ||||||
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 × ÷ =
2 Click competitor name to see calculations.
- Operating Income (Loss)
- The operating income experienced significant volatility over the analyzed period. Starting at 1,514 million USD in 2018, it sharply decreased to 141 million USD in 2019. A considerable loss of 2,820 million USD was recorded in 2020, indicating a challenging year. However, the company recovered strongly in the following years, with operating income increasing to 3,227 million USD in 2021 and further rising to 8,084 million USD in 2022. This pattern suggests a substantial turnaround after the losses faced in 2020.
- Revenues
- Revenues followed a similar trend to operating income but with less pronounced fluctuation. Initially, revenues were 10,734 million USD in 2018, before falling to 6,220 million USD in 2019 and further decreasing to 4,828 million USD in 2020. A marked recovery occurred starting in 2021, with revenues climbing to 12,206 million USD and continuing to grow to 19,169 million USD in 2022. The data indicates a recovery and subsequent growth in sales or production volume post-2020.
- Operating Profit Margin
- The operating profit margin displayed notable instability across the years. The margin decreased substantially from 14.1% in 2018 to 2.27% in 2019, followed by a sharp decline to -58.41% in 2020, reflecting the loss incurred during that year. A strong rebound occurred in 2021 with the margin rising to 26.44%, and this upward trend continued into 2022, reaching 42.17%. This margin improvement aligns with the increasing operating income and revenues, indicating enhanced profitability and operational efficiency in the most recent years.
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 | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
| Net Profit Margin, Sector | ||||||
| Oil, Gas & Consumable Fuels | ||||||
| Net Profit Margin, Industry | ||||||
| Energy | ||||||
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 × ÷ =
2 Click competitor name to see calculations.
- Net earnings (loss) attributable to Devon
- The net earnings show significant volatility over the analyzed period. Beginning with a strong positive value of $3,064 million in 2018, the company experienced losses in 2019 and 2020, with negative figures of $355 million and $2,680 million respectively. Following this downturn, net earnings recovered notably in 2021 and surged further in 2022, reaching $2,813 million and $6,015 million respectively. This pattern indicates a period of financial difficulty followed by a substantial recovery and growth phase.
- Revenues
- Revenues demonstrated a fluctuating but overall increasing trend throughout the five-year span. Starting at $10,734 million in 2018, revenue declined sharply in 2019 to $6,220 million and further to $4,828 million in 2020. However, from 2021 onward, revenues increased significantly to $12,206 million and then to $19,169 million in 2022. This indicates a recovery and expansion in revenue generation following two years of decline.
- Net profit margin
- The net profit margin followed a similar volatile pattern as net earnings. In 2018, the margin was a positive 28.54%, followed by negative margins of -5.71% and a steep decline to -55.51% in 2019 and 2020 respectively. The company then reversed this trend with margins improving to 23.05% in 2021 and increasing further to 31.38% in 2022. This reflects a restoration of profitability and improved operational efficiency after a period of losses.
Return on Equity (ROE)
Devon Energy Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings (loss) attributable to Devon | ||||||
| Stockholders’ equity attributable to Devon | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
| ROE, Sector | ||||||
| Oil, Gas & Consumable Fuels | ||||||
| ROE, Industry | ||||||
| Energy | ||||||
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 × ÷ =
2 Click competitor name to see calculations.
- Net Earnings (Loss) Attributable to Devon
- The net earnings exhibit significant volatility over the five-year period. Beginning with a strong positive earning of 3064 million USD in 2018, the company experienced losses in 2019 and 2020, with -355 million USD and a substantially larger loss of -2680 million USD, respectively. A notable recovery occurred in 2021, with net earnings rising to 2813 million USD, followed by further growth to 6015 million USD in 2022.
- Stockholders’ Equity Attributable to Devon
- Stockholders' equity shows a decreasing trend from 2018 to 2020, declining from 9186 million USD to 2885 million USD, reflecting possible losses or capital reductions during this period. From 2021 onwards, there is a recovery and growth in equity levels, increasing to 9262 million USD and then to 11167 million USD in 2022. This suggests a strengthening financial position in the latter years.
- Return on Equity (ROE)
- The ROE follows a trajectory similar to net earnings, starting high at 33.36% in 2018 before declining sharply to negative values of -6.12% in 2019 and -92.89% in 2020. This indicates significant unprofitability during these years. The ROE then recovers impressively, reaching 30.37% in 2021 and further improving to 53.86% in 2022, signaling strong profitability and efficient use of equity capital during the recent period.
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 | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
| ROA, Sector | ||||||
| Oil, Gas & Consumable Fuels | ||||||
| ROA, Industry | ||||||
| Energy | ||||||
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 × ÷ =
2 Click competitor name to see calculations.
- Net Earnings (Loss) Attributable to Devon
- The net earnings demonstrate considerable volatility over the five-year period. In 2018, net earnings were notably strong at $3,064 million. This was followed by a sharp decline to losses in 2019 and 2020, with losses deepening to $2,680 million in 2020. Recovery occurred starting in 2021 with net earnings returning to a positive $2,813 million and further increasing significantly to $6,015 million in 2022, suggesting a strong financial rebound and improved profitability in recent years.
- Total Assets
- The total assets declined substantially from $19,566 million in 2018 to a low point of $9,912 million in 2020, representing a contraction of nearly 49%. However, there was a marked reversal beginning in 2021, with total assets increasing sharply to $21,025 million, and further growth to $23,721 million in 2022, indicating a restoration and expansion of the asset base beyond previous levels.
- Return on Assets (ROA)
- The ROA corresponds closely with the net earnings trend. It was positive and strong at 15.66% in 2018, signaling efficient asset use in generating earnings. ROA turned negative in 2019 and deteriorated further to -27.04% in 2020, reflecting poor asset performance during this period. The ratio then improved to 13.38% in 2021 and rose significantly to 25.36% in 2022, underscoring substantial enhancement in asset profitability and operational efficiency in the latter years.