Hess Corp. (NYSE:HES)

The financial data reveals several noteworthy trends across the five-year period ending in 2022. Total assets, both reported and adjusted for goodwill, show an overall decline from 2018 to 2020, followed by a gradual recovery through to 2022. Specifically, reported total assets decreased from $21,433 million in 2018 to $18,821 million in 2020, then increased to $21,695 million by 2022. Adjusted total assets mirror this pattern, dropping from $21,073 million to $18,461 million by 2020 before rising to $21,335 million in 2022.

In contrast to the asset trend, the stockholders’ equity exhibits a more pronounced fluctuation with a significant decline over the initial years. Reported equity fell sharply from $9,629 million in 2018 to $5,366 million in 2020, reflecting a substantial reduction in shareholder value during this period. A gradual recovery is apparent from 2020 onward, with equity rising back to $7,855 million by 2022, yet still below the 2018 level. The adjusted equity figures follow a similar trajectory, decreasing from $9,269 million in 2018 to $5,006 million in 2020 before partially rebounding to $7,495 million in 2022.

Total Assets

Experience a decline through 2020 with a recovery trend commencing in 2021, suggesting possible impacts from operational or market challenges followed by stabilization or growth.

Adjusted assets closely align with reported figures, indicating goodwill adjustments have a consistent effect over the period.

Stockholders’ Equity

Display a more volatile pattern, with a steep decrease until 2020 which could indicate significant losses, write-downs, or dividend payments surpassing earnings during that time.

The equity recovery post-2020, although notable, does not fully restore the equity to previous highs, implying ongoing challenges or strategic capital management decisions.

Both reported and adjusted equity maintain parallel movements, suggesting goodwill considerations do not materially alter the equity valuation trends.

Overall, the company experienced a period of contraction in its asset base and shareholder equity through 2020, followed by a partial recovery by 2022. The steady alignment between reported and goodwill-adjusted figures suggests that goodwill impairments or adjustments had a uniform impact during these years. The trends indicate a cycle of downturn and recovery that may reflect broader industry dynamics or company-specific events during the period under review.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios remained stable at 0.3 in 2018 and 2019, before declining to 0.25 in 2020. Subsequently, a noticeable improvement occurred in 2021, with ratios increasing to approximately 0.36-0.37 and further rising to 0.52-0.53 by the end of 2022. This trend indicates enhanced efficiency in asset utilization over the latter two years.

Financial Leverage

The financial leverage ratio showed an increasing trend from around 2.23-2.27 in 2018 to peak levels of approximately 3.51-3.69 in 2020. Following this peak, leverage decreased in 2021 to roughly 3.26-3.39 and further declined in 2022 to around 2.76-2.85. The pattern suggests an initial increase in debt reliance, followed by deleveraging actions in the recent period.

Return on Equity (ROE)

ROE experienced significant volatility across the analyzed years. Both reported and adjusted figures were negative in 2018 and 2019, with a sharp decline in 2020 reaching approximately -58% to -62%. A strong recovery began in 2021, with positive returns close to 9-10%, further advancing to roughly 27% by 2022. This recovery may reflect improved profitability and operational performance.

Return on Assets (ROA)

The ROA mirrored the trends observed in ROE, with negative returns from 2018 through 2020, bottoming near -16.5%. A shift towards profitability emerged in 2021, as ROA turned positive at about 2.7-2.8%, and then improved substantially to nearly 9.7-9.8% in 2022. The strengthening ROA over the last two years signals enhanced asset income generation capacity.

The analysis of the financial data reveals several key trends concerning total assets and asset turnover ratios over the five-year period.

Total Assets

Reported total assets exhibited a modest increase from 21,433 million US dollars at the end of 2018 to 21,695 million US dollars at the end of 2022. Despite a dip in 2020 to 18,821 million US dollars, the overall asset base showed recovery in the subsequent years, reaching levels slightly above those observed in 2018.

Adjusted total assets, which exclude goodwill, follow a similar pattern but consistently display slightly lower values than the reported figures. The adjusted values decreased to 18,461 million in 2020, reflecting a temporary contraction, and then increased to 21,335 million in 2022, maintaining close proximity to reported totals.

Total Asset Turnover

The reported total asset turnover ratio remained steady at 0.3 in 2018 and 2019, then declined notably to 0.25 in 2020, indicating reduced efficiency in generating sales from assets during this period. A strong recovery ensued in 2021, with the ratio rising to 0.36, followed by a further significant increase to 0.52 in 2022. This upward trend suggests an improving return on asset usage and enhanced operational efficiency in recent years.

Adjusted total asset turnover ratios closely mirror the reported figures, confirming consistent trends whether goodwill is taken into consideration or excluded.

Overall, the data illustrates a stable asset base with a temporary disruption in 2020, accompanied by a marked improvement in asset utilization efficiency, especially evident from 2021 onward. The recovery and subsequent growth in turnover ratios imply positive operational developments and potentially stronger revenue generation relative to asset size.

The data presents a comprehensive view of the company's financial position over a five-year period, with a focus on total assets, stockholders' equity, and financial leverage, both on a reported basis and adjusted for goodwill.

Total Assets

Reported total assets demonstrate a slight increase from 2018 to 2019, rising from $21,433 million to $21,782 million. This is followed by a notable decrease in 2020 to $18,821 million. Assets recover gradually in the subsequent years, reaching $21,695 million by 2022, though not surpassing the peak in 2019. Adjusted total assets follow a similar trajectory but consistently remain slightly lower than reported assets, highlighting the effect of goodwill adjustments. The pattern indicates a contraction in 2020, likely reflecting strategic or market-driven asset reductions, with recovery efforts underway thereafter.

Stockholders’ Equity

Stockholders’ equity shows a clear declining trend from 2018 through 2020, dropping sharply from $9,629 million reported in 2018 to $5,366 million in 2020. After this trough, equity begins to recover, increasing to $7,855 million by 2022. The adjusted equity figures mirror this pattern but remain consistently lower, reflecting the impact of goodwill adjustments on equity valuation. This decline and subsequent partial recovery in equity could reflect underlying challenges faced during the early period, with stabilization efforts becoming evident post-2020.

Financial Leverage

The financial leverage ratio indicates the company's reliance on debt relative to equity. Both reported and adjusted leverage ratios show an upward trend from 2018 to 2020, peaking at 3.51 (reported) and 3.69 (adjusted) in 2020. This increase points to higher leverage and potentially increased financial risk during that year. Following 2020, leverage ratios decrease in 2021 and 2022 to 2.76 (reported) and 2.85 (adjusted), suggesting efforts to reduce debt levels or strengthen equity, thereby improving the capital structure. Notably, adjusted leverage ratios consistently exceed reported ratios, implying that goodwill adjustments highlight somewhat higher leverage levels.

The data reveals notable fluctuations in both reported and adjusted stockholders' equity over the five-year period. Reported total stockholders’ equity declined significantly from 9,629 million US dollars in 2018 to 5,366 million in 2020, indicating a substantial erosion of equity during these years. Subsequently, there was a recovery trend with equity rising to 7,855 million by the end of 2022. The adjusted stockholders’ equity, which accounts for goodwill adjustments, follows a similar pattern but consistently registers lower values compared to the reported figures, reflecting the impact of the adjustments on the equity base.

Return on equity (ROE), both reported and adjusted, exhibited marked volatility and a pronounced downturn in 2020. Negative ROE values persisted from 2018 through 2020, with the adjusted metric showing a steep drop to nearly -61.79% in 2020. This sharp decline suggests significant operational or market challenges that severely impaired profitability relative to equity during that year. Following 2020, ROE showed a strong turnaround, becoming positive in 2021 and increasing substantially in 2022 to 26.68% reported and 27.97% adjusted. The adjusted ROE consistently tracks below the reported ROE in the negative years but exceeds it in the positive years, highlighting the influence of goodwill adjustments on equity returns.

Equity Trends

Both reported and adjusted equity fell sharply between 2018 and 2020, then rebounded through 2022.

The adjustment for goodwill reduces equity figures, emphasizing the impact of non-tangible assets.

Profitability (ROE)

ROE was negative and deteriorated considerably until 2020, indicating operating losses or write-downs.

A strong recovery in profitability is evident from 2021 onward, with positive and increasing ROE levels.

Goodwill adjustments lowered ROE in negative periods but improved it during profitable years.

In summary, the financial data points to a period of financial distress culminating in 2020, followed by recovery and growth by 2022. Adjustments for goodwill consistently reduce equity base but appear to accentuate the swings in profitability metrics. The trends suggest management actions or market conditions significantly impacted equity and returns, with improvements evident in the most recent reported years.

Total Assets

Both reported and adjusted total assets exhibit a decreasing trend from 2018 to 2020, with reported total assets declining from 21,433 million US dollars in 2018 to 18,821 million in 2020, and adjusted total assets decreasing similarly from 21,073 million to 18,461 million over the same period. Subsequently, a recovery is observed in 2021 and 2022, where reported total assets increase to 20,515 million and then to 21,695 million, and adjusted total assets rise to 20,155 million and then to 21,335 million. Overall, the total assets demonstrate a V-shaped pattern, with a notable dip in 2020 followed by gradual recovery.

Return on Assets (ROA)

Both reported and adjusted ROA percentages show parallel trends, indicating the adjustments have minimal impact on this metric. The ROA starts at a negative value in 2018 (-1.32% reported and -1.34% adjusted) and worsens notably in 2019 and especially in 2020, reaching a pronounced negative trough in 2020 (-16.43% reported and -16.75% adjusted). After this significant decline, the ROA recovers strongly in 2021, turning positive (2.72% reported and 2.77% adjusted), and continues improving in 2022, reaching 9.66% and 9.82% respectively. This progression signals a substantial turnaround in profitability for the company starting in 2021, moving from losses toward strong positive returns on assets.

Goodwill Adjustment Impact

The figures for adjusted total assets and adjusted ROA are marginally lower or more negative than the reported values, indicating goodwill adjustments slightly reduce asset base and returns metrics. However, the differences between reported and adjusted figures are relatively minor and the overall trends for both sets of data align closely, suggesting the goodwill adjustments do not materially alter the overall financial analysis or trend direction.