Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Price to Sales (P/S) since 2005
- Analysis of Revenues
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Profitability Ratios (Summary)
Hess Corp., profitability ratios
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Return on Sales | ||||||
| Operating profit margin | ||||||
| Net profit margin | ||||||
| Return on Investment | ||||||
| Return on equity (ROE) | ||||||
| Return on assets (ROA) | ||||||
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).
The financial ratios over the examined periods indicate significant fluctuations in the company's profitability and efficiency metrics.
- Operating Profit Margin
- The operating profit margin showed a decline from 10.63% in 2018 to 9.25% in 2019, followed by a sharp drop to -51.04% in 2020, indicating a substantial operating loss during that year. However, there was a strong recovery in 2021, with the margin rising to 26.37%, and further improvement in 2022 up to 35.67%. This suggests a volatile operating performance with a significant rebound after the downturn in 2020.
- Net Profit Margin
- The net profit margin also exhibited volatility. It was negative in 2018 and 2019 (-4.46% and -6.28% respectively), deteriorating drastically to -66.27% in 2020. This indicates severe net losses in that year. Recovery commenced in 2021 with a positive margin of 7.48%, increasing substantially to 18.51% in 2022, reflecting improved bottom-line profitability.
- Return on Equity (ROE)
- ROE mirrored the patterns seen in profitability ratios. Negative values of -2.93% and -4.67% were observed in 2018 and 2019 respectively, followed by a steep decline to -57.64% in 2020, illustrating significant losses relative to shareholders' equity. Subsequent years saw a positive turnaround with ROE climbing to 8.87% in 2021 and rising sharply to 26.68% in 2022, indicating enhanced value generation for equity holders.
- Return on Assets (ROA)
- ROA showed a similar trend, with minor negative returns in 2018 (-1.32%) and 2019 (-1.87%), deteriorating markedly to -16.43% in 2020. The metric rebounded to positive territory in 2021 at 2.72%, improving further to 9.66% in 2022, suggesting a recovery in asset utilization efficiency.
Overall, the data reveals a period of significant financial distress in 2020 across all profitability and return metrics, followed by a pronounced recovery phase starting in 2021 and continuing into 2022. The improving margins and returns suggest enhanced operational efficiency and profitability in recent years after a noteworthy downturn. The fluctuations point to exposure to volatile market or operational challenges during the 2020 period, with management likely implementing effective corrective measures thereafter.
Return on Sales
Return on Investment
Operating Profit Margin
Hess 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) | ||||||
| Income (loss) before interest and income taxes | ||||||
| Sales and other operating 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 × Income (loss) before interest and income taxes ÷ Sales and other operating revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Income (loss) before interest and income taxes
- The income before interest and income taxes exhibited significant volatility over the analyzed period. Starting at 672 million USD in 2018, there was a slight decline to 601 million USD in 2019. A notable deterioration occurred in 2020, with a substantial loss of 2,382 million USD. This was followed by a strong recovery, with income rising to 1,971 million USD in 2021 and further increasing to 4,039 million USD in 2022, indicating a robust rebound and improvement in operating profitability.
- Sales and other operating revenues
- Sales and operating revenues showed a more consistent upward trend with some fluctuations. Revenues increased moderately from 6,323 million USD in 2018 to 6,495 million USD in 2019, then declined sharply to 4,667 million USD in 2020, likely reflecting external adverse conditions. This was followed by a marked recovery, with revenues climbing to 7,473 million USD in 2021 and reaching a peak of 11,324 million USD in 2022, demonstrating strong growth momentum in recent years.
- Operating profit margin
- The operating profit margin tracked considerable variation consistent with operating income changes. It started at a healthy 10.63% in 2018, decreased to 9.25% in 2019, and then plunged dramatically to a negative margin of -51.04% in 2020, indicating significant operational challenges. A recovery phase ensued with the margin rebounding to 26.37% in 2021 and further improving to 35.67% in 2022, reflecting enhanced profitability and operational efficiency during the last two years.
Net Profit Margin
Hess 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 income (loss) attributable to Hess Corporation | ||||||
| Sales and other operating 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 income (loss) attributable to Hess Corporation ÷ Sales and other operating revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income (Loss) Attributable to Hess Corporation
- The net income demonstrated considerable fluctuation over the observed period. It initially showed negative values, with losses of $282 million in 2018 and $408 million in 2019. The loss deepened substantially in 2020 to $3,093 million. However, a significant recovery occurred in the subsequent years, with positive net income of $559 million in 2021 and a more marked increase to $2,096 million in 2022.
- Sales and Other Operating Revenues
- Sales and other operating revenues remained relatively stable between 2018 and 2019, increasing modestly from $6,323 million to $6,495 million. A sharp decline was observed in 2020, falling to $4,667 million, likely reflecting adverse market conditions. Revenues rebounded strongly in 2021 to $7,473 million and continued to grow substantially in 2022, reaching $11,324 million, reflecting a robust recovery and expansion in operational scale.
- Net Profit Margin
- The net profit margin followed a pattern consistent with net income and revenue trends. It was negative in the initial years, with -4.46% in 2018 and worsening to -6.28% in 2019. The margin contracted sharply to -66.27% in 2020, indicating severe profitability challenges. Subsequently, there was a significant turnaround to a positive margin of 7.48% in 2021, further improving to 18.51% in 2022, signaling enhanced profitability and operational efficiency.
- Overall Trends and Insights
- The data indicates that the company experienced a downturn culminating in 2020, characterized by decreased revenues, substantial losses, and a negative profit margin. This was followed by a strong recovery phase in 2021 and 2022, with notable improvements in revenue, profitability, and net income. The sharp increases in revenue and profit margin in the final two years suggest a successful adaptation to market conditions and possibly improved operational management and cost control. The return to positive and growing profitability metrics indicates improved financial health and sustainability in recent periods.
Return on Equity (ROE)
Hess Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Hess Corporation | ||||||
| Total Hess Corporation stockholders’ equity | ||||||
| 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 income (loss) attributable to Hess Corporation ÷ Total Hess Corporation stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals notable volatility and eventual recovery in profitability metrics over the five-year period analyzed. Net income attributable to the corporation experienced a significant decline from a loss of $282 million in 2018 to an even larger loss of $3,093 million in 2020. However, this downward trend reversed sharply in 2021, with net income turning positive at $559 million and further increasing to $2,096 million in 2022.
Corresponding to these income fluctuations, the return on equity (ROE) mirrored the losses and recovery pattern. ROE was negative for the initial three years, worsening to -57.64% in 2020, consistent with the substantial net losses. It then transitioned to a positive 8.87% in 2021 and rose significantly to 26.68% in 2022, indicating improved efficiency in generating profits from shareholders' equity.
Total stockholders' equity exhibited a declining trend from $9,629 million in 2018 to $5,366 million in 2020. This decrease aligns with the substantial net losses during this period, suggesting erosion of shareholders’ capital. Following the recovery in income, equity levels partially rebounded to $6,300 million in 2021 and further to $7,855 million in 2022, though not yet reaching the initial 2018 level.
Overall, the data reflects a period of financial distress culminating in 2020, followed by a marked recovery starting in 2021. The corporation improved its profitability and capital base significantly post-2020, as evidenced by the restoration of positive net income, improved ROE, and increased shareholders' equity. These patterns suggest a successful turnaround and enhanced operational performance in the most recent two years.
Return on Assets (ROA)
Hess Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Hess Corporation | ||||||
| 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 income (loss) attributable to Hess Corporation ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income (Loss) Attributable to Hess Corporation
- The net income figures show significant volatility over the five-year period. Initially, the company experienced losses of $282 million and $408 million in 2018 and 2019, respectively. The loss deepened markedly in 2020, reaching $3,093 million, indicating considerable financial challenges during that year. However, this trend reversed sharply in 2021, with the company reporting a net income of $559 million, signaling improved profitability. The positive trend continued and strengthened in 2022, with net income rising substantially to $2,096 million.
- Total Assets
- Total assets demonstrated a relatively stable pattern with minor fluctuations. Starting at $21,433 million in 2018, assets slightly increased to $21,782 million in 2019. In 2020, assets declined to $18,821 million, which may be associated with the financial difficulties reflected in net income during the same year. Assets rebounded in subsequent years, reaching $20,515 million in 2021 and further increasing to $21,695 million in 2022, approaching pre-2020 levels.
- Return on Assets (ROA)
- Return on assets mirrors the profitability trend observed in net income. Negative ROA values were recorded in the first three years, declining from -1.32% in 2018 to a severe -16.43% in 2020, reflecting poor asset utilization during this period. Following this downturn, ROA turned positive in 2021, at 2.72%, and improved significantly to 9.66% in 2022, indicating enhanced efficiency in generating returns from the company's assets.