Hess Corp. (NYSE:HES)

The financial ratios over the five-year period indicate notable fluctuations and trends in leverage and coverage metrics.

Debt to Equity Ratios

The debt to equity ratio increased significantly from 0.69 in 2018 to a peak of 1.59 in 2020, suggesting a heightened reliance on debt relative to equity during that period. After 2020, this ratio declined to 1.08 by 2022, signaling a partial deleveraging or improved equity position. Including operating lease liabilities, the pattern is similar but with slightly higher values, peaking at 1.69 in 2020 and falling to 1.16 in 2022.

Debt to Capital Ratios

This ratio escalated from 0.41 in 2018 up to 0.61 in 2020, indicating an increase in debt as a proportion of total capital. Subsequently, it decreased to 0.52 by 2022. When operating lease liabilities are included, the trend remains consistent with marginally elevated ratios throughout the years.

Debt to Assets Ratios

The debt to assets ratio rose from 0.31 in 2018 to 0.45 in 2020, denoting greater leverage in relation to total assets, but then declined steadily to 0.39 in 2022. Including operating lease liabilities, the ratio shows a similar trend with higher values, moving from 0.31 in 2018 to 0.48 in 2020 and then decreasing to 0.42 in 2022.

Financial Leverage

This ratio increased from 2.23 in 2018 to a peak of 3.51 in 2020, coinciding with the rise in debt ratios, before declining to 2.76 in 2022. This suggests that the company’s reliance on debt to amplify equity returns was at its highest in 2020 and decreased thereafter.

Interest Coverage Ratio

The interest coverage ratio remained relatively stable around 1.55 to 1.58 between 2018 and 2019, but deteriorated sharply to a negative figure (-5.09) in 2020, indicating an inability to cover interest expenses possibly due to operational or extraordinary challenges. Recovery is observed in 2021 and 2022 with ratios improving to 4.10 and then 8.19, respectively, reflecting enhanced earnings capacity relative to interest obligations.

Fixed Charge Coverage Ratio

This coverage ratio follows a trend similar to interest coverage, showing stability close to 1.26–1.27 in 2018–2019, dropping significantly to -3.27 in 2020, and rebounding to 3.62 in 2021 and further to 6.84 in 2022. The improvement suggests better capacity to meet fixed charges including interest and lease expenses.

Overall, the data depict a period of increasing leverage culminating in 2020, accompanied by strained ability to service interest and fixed charges, possibly due to adverse operational or economic conditions. Subsequent years reveal a gradual deleveraging and marked improvement in coverage ratios, indicating a strengthening financial position and enhanced earnings relative to fixed financial obligations by the end of 2022.

The financial data over the five-year period reveals several notable trends in the company's capital structure and financial leverage. Total debt exhibited a consistent upward trajectory from 2018 through 2021, rising from $6,672 million to a peak of $8,677 million, before experiencing a slight reduction to $8,481 million in 2022. This indicates a general increase in borrowed funds over the period, with a mild contraction in the most recent year.

Stockholders’ equity, on the other hand, showed contrasting behavior. It declined sharply from $9,629 million in 2018 to a low of $5,366 million in 2020, suggesting a significant erosion of shareholder value during that interval. However, equity rebounded in the subsequent years, climbing to $6,300 million in 2021 and further increasing to $7,855 million by the end of 2022. This recovery points to an improvement in the company’s net asset position after a period of notable deterioration.

The debt-to-equity ratio corroborates these observations about leverage and capital structure adjustments. Initially, the ratio rose markedly from 0.69 in 2018 to 1.59 in 2020, reflecting a sharp rise in leverage corresponding with the decline in equity. After reaching this peak, the ratio declined to 1.38 in 2021 and further to 1.08 in 2022, indicating a gradual deleveraging process that aligns with the increase in equity and slight reduction in total debt.

In summary, the data depict a period of increased financial leverage and weakened equity position culminating in 2020, followed by a phase of strengthening equity capital and modest debt reduction in the two subsequent years. This evolution suggests strategic actions potentially aimed at balancing the capital structure and mitigating financial risk after a period of intensified borrowing and diminished shareholder equity.

The analysis of the financial data reveals significant changes in debt, equity, and leverage ratios over the five-year period.

Total debt (including operating lease liability)

The total debt showed a consistent upward trend from 2018 to 2020, increasing from 6,672 million USD in 2018 to a peak of 9,075 million USD in 2020. After 2020, the debt level stabilized with marginal increases, reaching 9,150 million USD by 2022.

Total stockholders’ equity

The total stockholders’ equity experienced a decline between 2018 and 2020, falling markedly from 9,629 million USD to 5,366 million USD. This represents a significant reduction in equity during that period. However, from 2020 onwards, equity values showed recovery, increasing steadily to 7,855 million USD by the end of 2022.

Debt to equity ratio

The debt to equity ratio increased sharply from 0.69 in 2018 to 1.69 in 2020, reflecting the combined effect of rising debt and declining equity. This indicates a worsening leverage position up to 2020. Afterward, the ratio decreased to 1.45 in 2021 and further to 1.16 in 2022, suggesting an improvement in the company’s capital structure as equity recovered and the rise in debt slowed.

Overall, the data suggest that the company increased its leverage notably through 2020, driven by higher debt levels and diminished equity. The period after 2020 shows signs of stabilization with a gradual deleveraging trend, as equity strengthened and the debt level plateaued. This indicates a strategic effort to improve financial stability and reduce risk exposure over the more recent years.

The financial data reveals several notable trends related to the company's debt structure and capital base over the five-year period.

Total Debt

Total debt increased steadily from 2018 to 2021, rising from $6,672 million to $8,677 million. In 2022, there was a slight decrease to $8,481 million. This indicates a general rise in the company's debt obligations with a minor reduction in the most recent year.

Total Capital

Total capital experienced a decline from $16,301 million in 2018 to $13,900 million in 2020, indicating a contraction during this period. After 2020, total capital rebounded, increasing to $14,977 million in 2021 and further to $16,336 million in 2022. This suggests some recovery and expansion in the company’s overall capital base after a period of reduction.

Debt to Capital Ratio

The debt to capital ratio rose from 0.41 in 2018 to a peak of 0.61 in 2020, reflecting a higher proportion of debt relative to total capital during that year. From 2020 onwards, the ratio declined to 0.58 in 2021 and further to 0.52 in 2022, indicating an improvement in the company’s leverage position. Although the ratio remains above the 2018 level, the decreasing trend after 2020 suggests efforts to manage or reduce leverage.

Overall, the period from 2018 to 2020 was characterized by increasing financial leverage with growing debt and contracting capital, resulting in a higher debt to capital ratio. The subsequent years show signs of stabilization and improvement, with declining leverage ratios and a recovering capital base. The data points to a strategic shift towards strengthening the financial structure after peak indebtedness in 2020.

The data indicates that total debt, including operating lease liabilities, has shown a consistent upward trend from 2018 through 2022. Specifically, the total debt increased from 6,672 million US dollars in 2018 to 9,150 million US dollars in 2022. The most significant rise occurred between 2018 and 2020, with a slower rate of increase thereafter, stabilizing around just above 9,100 million US dollars by 2022.

Total capital, also inclusive of operating lease liabilities, exhibited moderate fluctuations over the same period. Initially, total capital grew slightly from 16,301 million US dollars in 2018 to 16,664 million in 2019. However, there was a notable decline in 2020 to 14,441 million US dollars. Subsequently, total capital rebounded to 15,441 million in 2021 and further increased to 17,005 million US dollars by 2022, surpassing the initial levels recorded in 2018 and 2019.

The debt to capital ratio reflects the proportion of debt relative to total capital and shows a marked increase between 2018 and 2020, climbing from 0.41 to 0.63. This suggests a rising leverage level during that period. From 2020 onwards, the ratio declines to 0.59 in 2021 and further to 0.54 in 2022, indicating a gradual reduction in leverage, although it remains elevated compared to 2018 and 2019 levels.

Total debt

Increased steadily over the five-year period, highlighting a growing reliance on debt financing.

Total capital

Experienced a dip in 2020 but recovered and grew in the following years, reflecting potentially enhanced equity or other capital forms.

Debt to capital ratio

Peaked in 2020, indicating increased leverage, then trended downward, suggesting efforts to improve capital structure balance post-2020.

Overall, the data reflects that while the absolute level of debt has increased, the company has taken steps since 2020 to strengthen its capital base and reduce leverage, improving financial stability in recent years after a period of higher risk exposure indicated by the elevated debt to capital ratio.

The financial data indicates several notable trends over the five-year period under review.

Total Debt

Total debt shows an overall increasing trend from 2018 to 2021, rising from approximately $6.67 billion to $8.68 billion. However, there is a slight decrease in 2022 to around $8.48 billion, suggesting a modest reduction in debt after reaching the peak in the previous year.

Total Assets

Total assets experience some fluctuations within the period. Starting at $21.43 billion in 2018, assets remain relatively stable into 2019 but then decline significantly to $18.82 billion in 2020. After this dip, asset values recover over the next two years, reaching approximately $21.70 billion by the end of 2022, nearly returning to the initial level of 2018.

Debt to Assets Ratio

The debt to assets ratio increases from 0.31 in 2018 to a peak of 0.45 in 2020, reflecting higher leverage potentially due to the combined effect of rising debt and falling asset values during that year. Subsequently, the ratio declines over the next two years to 0.39 in 2022, indicating an improvement in the company's leverage position as assets recover and debt slightly decreases.

Overall, the data suggests a period of financial strain around 2020, with increased leverage and reduced asset base, followed by gradual recovery in asset values and somewhat stabilized debt levels through 2021 and 2022. The reduction in the debt to assets ratio after 2020 could signal effective management efforts to strengthen the balance sheet and reduce financial risk.

The financial data reveals several key trends in debt and asset management over the five-year period.

Total Debt (including operating lease liability)

There is a consistent increase in total debt from 2018 through 2020, rising from $6,672 million to $9,075 million. The growth rate slows notably between 2020 and 2022, with debt figures stabilizing around the $9,140 to $9,150 million mark.

Total Assets

Total assets initially increase slightly from $21,433 million in 2018 to $21,782 million in 2019, followed by a decline to $18,821 million in 2020. Subsequently, assets recover in 2021 and 2022, reaching a value slightly below the 2019 peak at $21,695 million in 2022.

Debt to Assets Ratio (including operating lease liability)

The debt to assets ratio exhibits a marked upward trend starting from 0.31 in 2018 and rising steadily to a peak of 0.48 in 2020. Post-2020, the ratio declines somewhat to 0.45 in 2021 and further to 0.42 in 2022, indicating an improvement in the leverage position relative to asset base.

Overall, the period showcases an initial phase of increasing leverage driven by rising debt and contracting assets through 2020. This was followed by a stabilization of debt levels and a recovery in assets that together contributed to a reduced leverage ratio in 2021 and 2022. The data suggests a strategic effort to manage and slightly reduce financial risk after the peak leverage occurred in 2020.

The financial data reveals several important trends in the company's balance sheet items over the five-year period ending December 31, 2022.

Total Assets

The total assets initially increased slightly from 21,433 million USD in 2018 to 21,782 million USD in 2019. This was followed by a noticeable decline to 18,821 million USD in 2020, likely reflecting asset disposals or impairments during that year. Subsequently, total assets rebounded to 20,515 million USD in 2021 and further increased to 21,695 million USD in 2022, though the levels in the last two years remained slightly below the peak seen in 2019. Overall, the asset base experienced volatility with a trough in 2020 but displayed a recovery trend thereafter.

Total Hess Corporation Stockholders’ Equity

Stockholders’ equity exhibited a downward trajectory from 9,629 million USD in 2018 to a low of 5,366 million USD in 2020, a decline of nearly 44%. This suggests significant reductions in retained earnings or possibly dividend payments, share repurchases, or losses that impacted equity. After reaching this low point, equity slowly increased to 6,300 million USD in 2021 and further to 7,855 million USD in 2022, indicating some recovery but still below the initial 2018 level. The pattern implies a period of financial strain culminating around 2020, followed by gradual rebuilding of equity.

Financial Leverage

Financial leverage, calculated as the ratio of total assets to stockholders’ equity, rose sharply from 2.23 in 2018 to 3.51 in 2020. This increase is consistent with the decline in equity and the temporary reduction in total assets, reflecting greater reliance on debt or other liabilities relative to equity. The ratio then decreased to 3.26 in 2021 and further to 2.76 in 2022, signaling a partial deleveraging and improved capitalization as equity recovered faster than total assets. The leverage trend mirrors the equity and asset changes, highlighting periods of increased financial risk around 2020 followed by stabilization.

In summary, the data reveals a period of significant financial contraction and increased leverage culminating in 2020, likely indicative of operational or market challenges. From 2021 onward, the company showed signs of recovery, with growth in assets and equity and a moderation of financial leverage, enhancing its financial stability compared to the mid-period stress.

The analysis of the annual financial data reveals notable variations in the key financial metrics over the five-year period.

Earnings before interest and tax (EBIT)

The EBIT figures exhibit significant fluctuations, with a positive value of US$619 million in 2018 and a slight decrease to US$601 million in 2019. A marked deterioration occurred in 2020, with EBIT dropping to a negative US$2,382 million, indicating substantial operational challenges or extraordinary losses. However, recovery is observed in the subsequent years, with EBIT rebounding to US$1,971 million in 2021 and further increasing to US$4,039 million in 2022, surpassing pre-2020 levels.

Interest Expense

The interest expense demonstrates a gradually increasing trend over the period under review. Starting at US$399 million in 2018, it slightly decreased to US$380 million in 2019 but then steadily rose to US$468 million in 2020, US$481 million in 2021, and US$493 million in 2022. This steady increase in interest costs could suggest increased borrowing or higher interest rates.

Interest Coverage Ratio

The interest coverage ratio closely mirrors the EBIT trend and reflects the company's ability to meet its interest obligations from operating earnings. The ratio remained relatively stable and low in 2018 and 2019 at 1.55 and 1.58 respectively, indicating limited coverage. In 2020, the ratio turned negative (-5.09) due to negative EBIT, signaling a significant inability to cover interest expenses from operating earnings. Solid improvement followed in 2021 and 2022, with the ratio rising to 4.10 and subsequently to 8.19, indicating a robust enhancement in operational profitability and coverage capacity.

Overall, the data portrays a company that underwent a challenging period in 2020 with negative EBIT and negative interest coverage, suggesting severe operational and financial stress. Subsequent recovery through 2021 and 2022 denotes an effective turnaround, evidenced by substantial EBIT growth and improved interest coverage despite rising interest expenses. The trends reflect a strengthening financial position and improved operational efficiency in the latter years.

Earnings before fixed charges and tax

The earnings before fixed charges and tax exhibited notable volatility over the analyzed period. Starting at 773 million US dollars in 2018, the figure increased significantly to 1,015 million in 2019. However, 2020 saw a sharp decline, resulting in a substantial negative value of -2,182 million, indicating a major loss or operational challenge during that year. Recovery commenced in 2021 with earnings rebounding to 2,059 million, followed by a strong upward trend peaking at 4,153 million in 2022, which is the highest value in the series.

Fixed charges

Fixed charges demonstrated relatively moderate fluctuations and remained within a narrow range throughout the period. The amounts hovered between 569 million and 799 million US dollars, with the highest level occurring in 2019 at 799 million. A general slight downward trend was observed after 2019, decreasing to 607 million by the end of 2022.

Fixed charge coverage ratio

The fixed charge coverage ratio mirrored the volatility in earnings before fixed charges and tax. In 2018 and 2019, the ratio was stable at around 1.26-1.27, indicating that earnings were sufficient to cover fixed charges by a similar margin in both years. The year 2020 presented a pronounced negative ratio of -3.27, reflecting the loss situation and inability to cover fixed charges. Recovery was evidenced in 2021, with the ratio climbing back to 3.62, more than doubling the coverage observed in the initial years. The ratio further increased substantially in 2022, reaching 6.84, suggesting a strong ability to meet fixed charges and improved financial stability.

Summary

The data reveals a period marked by financial stress in 2020 with significant losses impacting earnings and coverage ratios. Yet, the subsequent two years demonstrate a marked recovery and robust growth in profitability, as evidenced by increased earnings and improved fixed charge coverage. Fixed charges themselves remained fairly stable, indicating that the changes in coverage ratios were primarily driven by fluctuations in earnings before fixed charges and tax. Overall, the trend suggests that after a challenging year, financial performance strengthened considerably by 2022, potentially signaling improved operational efficiency or favorable market conditions.