Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Reportable Segments
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Return on Assets (ROA) since 2005
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Return on Invested Capital (ROIC)
Hess Corp., ROIC 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 operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
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 NOPAT. See details »
2 Invested capital. See details »
3 2022 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT exhibited significant volatility over the analyzed period. It started at 159 million USD in 2018, then decreased markedly to 77 million USD in 2019. In 2020, a substantial loss was recorded, with NOPAT falling to -2506 million USD. The company rebounded in subsequent years, attaining positive NOPAT values of 1404 million USD in 2021 and further increasing to 3165 million USD in 2022. This pattern suggests a severe operational challenge in 2020, followed by a strong recovery.
- Invested Capital
- Invested capital demonstrated a moderate decline from 19,028 million USD in 2018 to 16,448 million USD in 2020, indicating a reduction in capital investment or asset base during this period. From 2021 onwards, invested capital began to grow again, reaching 18,062 million USD in 2022. This trend suggests a contraction during the challenging 2019-2020 period, followed by renewed investment or asset accumulation in the latter years.
- Return on Invested Capital (ROIC)
- The ROIC followed a trajectory similar to NOPAT, reflecting profitability trends. It was relatively low in 2018 and 2019, at 0.84% and 0.41% respectively, before plummeting to -15.24% in 2020, indicating significant value destruction and poor returns on capital during that year. ROIC improved substantially thereafter, climbing to 8.32% in 2021 and reaching 17.52% in 2022, highlighting a strong recovery and effective capital utilization in the most recent periods.
Decomposition of ROIC
Hess Corp., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × | ||||
| Dec 31, 2018 | = | × | × |
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 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
- Operating Profit Margin (OPM)
- The operating profit margin displayed a declining trend from 10.49% in 2018 to 9.61% in 2019, followed by a significant negative value of -50.58% in 2020, indicating a substantial operating loss during that period. However, the margin recovered sharply in the subsequent years, reaching 26.63% in 2021 and further increasing to 35.93% in 2022. This pattern suggests a period of financial distress in 2020, followed by a strong operational recovery.
- Turnover of Capital (TO)
- Turnover of capital showed a gradual upward trend over the analyzed period, starting at 0.33 in 2018 and increasing to 0.35 in 2019. Despite a dip to 0.28 in 2020, it increased substantially afterwards, reaching 0.44 in 2021 and then 0.63 in 2022. This improvement indicates increasingly efficient use of capital to generate revenue, especially in the latter years.
- 1 – Effective Cash Tax Rate (CTR)
- The effective cash tax rate demonstrated significant volatility. It dropped from 24.01% in 2018 to a low of 12.4% in 2019 but surged to 100% in 2020, implying the entire pre-tax income was paid as tax or there were tax-related anomalies. The rate then decreased to 70.55% in 2021, and slightly increased again to 77.79% in 2022. These fluctuations point to irregular tax expenses or unusual tax effects during this period.
- Return on Invested Capital (ROIC)
- Return on invested capital followed a trajectory similar to operating profit margin. It decreased from 0.84% in 2018 to 0.41% in 2019, then plummeted to -15.24% in 2020, reflecting a period of negative returns likely due to operational difficulties. Positive recovery occurred in 2021 with a ROIC of 8.32%, which almost doubled to 17.52% in 2022, indicating significant improvements in generating returns from invested capital in recent years.
Operating Profit Margin (OPM)
Hess Corp., OPM 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 operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Sales and other operating revenues | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2022 Calculation
OPM = 100 × NOPBT ÷ Sales and other operating revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes experienced a notable fluctuation over the five-year period. It started at 663 million USD in 2018 and slightly decreased to 624 million USD in 2019. There was a significant decline in 2020, with the NOPBT reaching a negative value of -2360 million USD, indicating a considerable loss during that year. However, recovery was evident in the following years, with NOPBT rebounding to 1990 million USD in 2021 and further increasing to 4069 million USD in 2022. This pattern suggests a period of financial distress in 2020, likely caused by external or internal factors, followed by a strong recovery and growth.
- Sales and Other Operating Revenues
- Sales and other operating revenues demonstrated a general upward trend from 2018 through 2022. Starting at 6323 million USD in 2018, revenues saw a slight increase to 6495 million USD in 2019. A noticeable decline occurred in 2020, with revenues dropping to 4667 million USD, consistent with the drop in profitability that year. However, the revenues rebounded markedly in the next two years, reaching 7473 million USD in 2021 and rising significantly to 11324 million USD in 2022. This growth in revenues post-2020 suggests a strong market or operational recovery that contributed positively to overall financial performance.
- Operating Profit Margin (OPM)
- The operating profit margin showed substantial volatility during the period. The margin was relatively stable in 2018 and 2019 at 10.49% and 9.61%, respectively. In 2020, a dramatic decline occurred, resulting in a deeply negative margin of -50.58%, reflecting the operating losses incurred that year. Subsequent years exhibited a strong recovery with the margin increasing to 26.63% in 2021 and further rising to 35.93% in 2022. The significant improvement in OPM in later years indicates enhanced operational efficiency and profitability relative to sales following the downturn in 2020.
Turnover of Capital (TO)
Hess Corp., TO 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) | ||||||
| Sales and other operating revenues | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
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 Invested capital. See details »
2 2022 Calculation
TO = Sales and other operating revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Sales and other operating revenues
- Sales and other operating revenues exhibited a fluctuating trend over the five-year period. Starting at $6,323 million in 2018, revenues increased slightly in 2019 to $6,495 million. A significant decline occurred in 2020, with revenues dropping to $4,667 million, representing the lowest point in the period analyzed. A strong recovery followed in 2021, with revenues rising to $7,473 million, and this upward momentum continued into 2022, reaching $11,324 million, the highest value in the dataset. Overall, this indicates volatility likely influenced by external factors, but with a substantial rebound and growth evident in the last two years.
- Invested capital
- Invested capital showed a general downward trend from 2018 to 2020, decreasing from $19,028 million to $16,448 million. Following this decline, the invested capital remained relatively stable in 2021 at $16,885 million before increasing again in 2022 to $18,062 million. This pattern suggests a reduction in capital investment during the 2019-2020 period, possibly reflecting a strategic contraction or adjustment to external market conditions, followed by a cautious increase in investment during 2021-2022.
- Turnover of capital (TO)
- The turnover of capital ratio reveals how efficiently the invested capital was generating revenues. It began at 0.33 in 2018 and improved slightly to 0.35 in 2019. However, the ratio fell to 0.28 in 2020, corresponding with the drop in sales revenue and invested capital. Subsequently, there was a marked improvement, with turnover increasing to 0.44 in 2021 and further to 0.63 in 2022. This upward trend indicates enhanced capital efficiency, with the company generating substantially higher revenues per unit of invested capital in the latter years.
- Overall insights
- The data indicates a challenging period culminating in 2020, likely influenced by broader economic or industry-specific factors that resulted in lower revenues and reduced capital investment. However, the subsequent years demonstrate a strong recovery and growth trajectory, with notably increased revenues and improved capital turnover ratios. The increase in invested capital in 2022 suggests renewed confidence and expansion efforts that are being effectively converted into revenue growth, as evidenced by the rising turnover of capital ratio. The company's operational efficiency and investment utilization have improved over the period, particularly in the last two years analyzed.
Effective Cash Tax Rate (CTR)
Hess Corp., CTR calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2022 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- Cash operating taxes exhibited a fluctuating trend across the five-year period. Starting at 504 million US dollars in 2018, the amount increased moderately to 547 million in 2019, then sharply declined to 146 million in 2020. Subsequently, the figure rebounded to 586 million in 2021 and further increased to 904 million in 2022. This pattern indicates significant volatility possibly related to varying taxable income or tax regulation changes.
- Net Operating Profit Before Taxes (NOPBT)
- NOPBT showed considerable variability over the period. The company recorded positive values in 2018 and 2019, with 663 million and 624 million US dollars respectively. However, there was a substantial loss in 2020, with NOPBT falling to negative 2,360 million. Following this downturn, the company returned to profitability with 1,990 million in 2021 and demonstrated further growth to 4,069 million in 2022. This indicates a strong recovery and upward trajectory in operational profitability after the significant downturn in 2020.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate experienced notable changes. The rate increased from approximately 76% in 2018 to nearly 88% in 2019, then data for 2020 was not available. In 2021, the rate declined sharply to about 29.45%, followed by a further decrease to 22.21% in 2022. This decreasing trend in tax rate in the latest years coincides with the recovery in profitability, potentially indicating changes in tax planning, credits, or operative jurisdictions affecting the overall cash tax burden.