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: Liabilities and Stockholders’ Equity
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Current Ratio since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Revenues
- Aggregate Accruals
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Profitability Ratios (Summary)
EOG Resources Inc., profitability ratios
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
- Gross Profit Margin
- The gross profit margin exhibited a consistent improvement over the five-year period, starting at 75.13% in 2015 and rising steadily each year to reach a peak of 85.72% in 2018 before experiencing a slight decline to 85.01% in 2019. This upward trend indicates increasing efficiency in managing production costs relative to revenue.
- Operating Profit Margin
- The operating profit margin showed a marked recovery from 2015 to 2019. It began with a significant negative margin of -76.35% in 2015, improving substantially to -16.02% in 2016. Subsequently, it turned positive in 2017 at 8.27%, peaking at 25.87% in 2018, before a slight decrease to 21.28% in 2019. This pattern reflects a strong turnaround in operational profitability, albeit with some volatility in the later years.
- Net Profit Margin
- The net profit margin followed a similar trajectory to the operating margin, starting from a negative level of -51.66% in 2015 and improving to -14.33% in 2016. It then shifted to positive territory in 2017 at 23.04%, although it gradually declined to 15.74% by 2019. This indicates progress toward profitability but also suggests potential challenges in maintaining net income levels after expenses and taxes.
- Return on Equity (ROE)
- Return on equity showed significant fluctuations during the period. Starting with a negative return of -34.96% in 2015, it improved to -7.84% in 2016 and transitioned to a positive 15.86% in 2017. ROE peaked at 17.66% in 2018, before falling to 12.64% in 2019. The overall trend denotes recovering investor returns, although the recent decline may indicate decreased profitability relative to shareholder equity.
- Return on Assets (ROA)
- The return on assets increased steadily from -16.77% in 2015 to 10.08% in 2018, reflecting improved asset utilization and profitability. However, there was a decline to 7.37% in 2019. Despite this decrease, the positive ROA for the last three years demonstrates enhanced efficiency in asset usage compared to the earlier period of negative returns.
Return on Sales
Return on Investment
Gross Profit Margin
EOG Resources Inc., gross profit margin calculation
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | ||||||
| Operating revenues and other | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Gross profit margin = 100 × Gross profit ÷ Operating revenues and other
= 100 × ÷ =
- Gross Profit
- The gross profit demonstrated a fluctuating upward trend over the five-year period. Starting from approximately 6.58 billion USD in 2015, it decreased to around 5.84 billion USD in 2016, followed by a notable increase to 9.27 billion USD in 2017. The upward trajectory continued significantly in 2018 and 2019, reaching approximately 14.81 billion USD and 14.78 billion USD, respectively. The marginal decline between 2018 and 2019 is minimal, indicating a stabilization at high levels.
- Operating Revenues and Other
- Operating revenues and other income followed a similar pattern to gross profit, starting at approximately 8.76 billion USD in 2015 and declining to roughly 7.65 billion USD in 2016. A substantial increase occurred in 2017, with revenues reaching approximately 11.21 billion USD. The upward trend continued sharply through 2018 and 2019, peaking near 17.28 billion USD and 17.38 billion USD, respectively. The relatively stable growth from 2018 to 2019 suggests consistent revenue generation at higher levels.
- Gross Profit Margin
- The gross profit margin exhibited a steady improvement over the period analyzed. It began at 75.13% in 2015, increased slightly to 76.28% in 2016, and showed a more pronounced rise to 82.75% in 2017. The margin peaked at 85.72% in 2018 before marginally decreasing to 85.01% in 2019. This trend indicates that the company has enhanced its efficiency or pricing strategy, increasing its profitability relative to operating revenues.
- Summary
- Overall, the company experienced initial declines in both gross profit and revenues in 2016, followed by significant growth through 2017 to 2019. The gross profit margin consistently improved, reflecting enhanced profitability and operational efficiency. The stabilization of gross profit and revenues at elevated levels in 2018 and 2019 suggests a period of consolidation after rapid growth. These trends collectively point towards stronger financial performance and improved management of costs relative to revenue generation.
Operating Profit Margin
EOG Resources Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Operating income (loss) | ||||||
| Operating revenues and other | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Operating profit margin = 100 × Operating income (loss) ÷ Operating revenues and other
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Income (Loss)
- The operating income exhibited a significant improvement over the five-year period analyzed. Starting with a substantial loss of approximately -6.69 billion US dollars at the end of 2015, the figure improved markedly to a loss of about -1.23 billion in 2016. The company transitioned into profitability in 2017, recording a positive operating income of 926 million, which then increased further to 4.47 billion in 2018. However, there was a slight decline in 2019 to 3.70 billion, indicating a reduction in operating income but maintaining a strong positive position compared to earlier years.
- Operating Revenues and Other
- Revenues showed an overall upward trajectory across the period. In 2015, revenues stood at approximately 8.76 billion US dollars and decreased slightly to around 7.65 billion in 2016. From 2017 onwards, there was a robust increase in revenues, with 11.21 billion reported in 2017, followed by a substantial surge to 17.28 billion in 2018. Revenues remained relatively stable into 2019, with a minor increase to 17.38 billion, suggesting a peak or plateau in revenue generation during the final two years.
- Operating Profit Margin
- The operating profit margin closely mirrored the trends in operating income and revenues, moving from negative territory to positive values over the period. Initially, the margin was deeply negative at -76.35% in 2015, reflecting heavy losses relative to revenue. This improved significantly in 2016 to -16.02%. By 2017, the margin turned positive at 8.27%, indicating a shift to operational profitability. The margin expanded further to 25.87% in 2018, which represents the peak operating efficiency during the period analyzed. In 2019, the margin slightly decreased to 21.28%, still reflecting strong profitability despite a modest decline.
Net Profit Margin
EOG Resources Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) | ||||||
| Operating revenues and other | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Net profit margin = 100 × Net income (loss) ÷ Operating revenues and other
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income (Loss)
- The net income shows a significant improvement over the five-year period. Initially, there was a substantial loss of approximately -4.52 billion US dollars in 2015, which decreased to a loss of around -1.10 billion US dollars in 2016. From 2017 onward, net income turned positive, reaching 2.58 billion US dollars, followed by growth to 3.42 billion US dollars in 2018, before tapering off slightly to 2.73 billion US dollars in 2019.
- Operating Revenues and Other
- Operating revenues experienced a general upward trend throughout the period. Revenues started at about 8.76 billion US dollars in 2015, dipped somewhat to 7.65 billion US dollars in 2016, and then increased sharply in the subsequent years, peaking at approximately 17.38 billion US dollars in 2019. This indicates considerable revenue growth, particularly between 2017 and 2019.
- Net Profit Margin
- The net profit margin aligns with the trends observed in net income, showing a negative margin of -51.66% in 2015, which improved to -14.33% in 2016. From 2017 onwards, profitability returned with margins of 23.04% in 2017, slightly decreasing to 19.79% in 2018 and further to 15.74% in 2019. This pattern reflects an initial recovery followed by a modest decline in profitability ratios despite increasing revenues.
Return on Equity (ROE)
EOG Resources Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) | ||||||
| Stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
ROE = 100 × Net income (loss) ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reflects significant fluctuations in profitability and overall equity growth over the five-year period.
- Net Income (Loss)
- The net income shows a sharp turnaround from a substantial loss of approximately -US$4.52 billion in 2015 to positive earnings starting in 2017. Following the loss years of 2015 and 2016, the company generated profits of around US$2.58 billion in 2017, which increased to roughly US$3.42 billion in 2018, before slightly declining to about US$2.73 billion in 2019. The initial heavy losses suggest significant challenges or restructuring activities in the earlier period that the company successfully overcame.
- Stockholders’ Equity
- There is a consistent upward trend in stockholders’ equity throughout the period. It increased from approximately US$12.94 billion at the end of 2015 to around US$21.64 billion by the end of 2019. This steady growth indicates enhanced capital retention and possibly reinvestment of earnings or increased shareholder contributions, reflecting improved financial stability and strength over time.
- Return on Equity (ROE)
- The ROE aligns with the net income trend, moving from a deeply negative return of -34.96% in 2015 to a less negative -7.84% in 2016, then turning positive at 15.86% in 2017. The ROE further improved to 17.66% in 2018 before moderating to 12.64% in 2019. This pattern shows a recovery and strengthening in profitability relative to shareholders' equity, although the slight decline in 2019 warrants attention to sustaining operational efficiency.
Return on Assets (ROA)
EOG Resources Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
ROA = 100 × Net income (loss) ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals significant fluctuations in the profitability and asset utilization of the entity over the analyzed period.
- Net Income (Loss)
- There is a marked improvement in net income from a substantial loss of approximately 4.52 billion USD in 2015 to positive returns in subsequent years. The entity transformed a loss in 2016, albeit smaller, into consistent profitability in 2017 through 2019. The highest net income was recorded in 2018, reaching over 3.4 billion USD, followed by a slight decline in 2019 to approximately 2.7 billion USD.
- Total Assets
- The total assets exhibit a steady upward trend each year, increasing from around 27 billion USD in 2015 to over 37 billion USD by the end of 2019. This gradual asset growth indicates ongoing investment or accumulation of resources throughout the period.
- Return on Assets (ROA)
- ROA mirrors the trend seen in net income, starting with negative returns in 2015 and 2016, indicating losses relative to asset base in those years. From 2017 onward, the ROA turns positive and improves to above 10% in 2018, then slightly declines in 2019 to 7.37%. This pattern signifies an enhanced efficiency in asset utilization and profitability after the initial loss years, though with some volatility towards the end of the period.
Overall, the analyzed period documents a turnaround from losses to profitability, accompanied by consistent asset growth and improved return metrics, reflecting enhancing operational performance and asset management.