Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Geographic Areas
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Operating Profit Margin since 2010
- Return on Equity (ROE) since 2010
- Return on Assets (ROA) since 2010
- Price to Operating Profit (P/OP) since 2010
- Price to Book Value (P/BV) since 2010
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Profitability Ratios (Summary)
Kinder Morgan 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 variability over the examined period, starting at 71.43% in 2015 and showing an initial increase to 73.21% in 2016. It then declined to 68.3% in 2017, remaining relatively stable in 2018 at 68.74%, before rising markedly to 75.3% in 2019. This indicates fluctuations in the company's ability to manage production or direct costs but an overall improvement in 2019.
- Operating profit margin
- The operating profit margin presented an upward trend with some fluctuations. It increased significantly from 16.99% in 2015 to 27.35% in 2016, then slightly declined to 25.86% in 2017. The margin rose again to 26.82% in 2018 and reached a peak of 36.89% in 2019, demonstrating enhanced operational efficiency and cost control over the years.
- Net profit margin
- Net profit margin showed substantial volatility. It was relatively low at 1.76% in 2015, improved to 5.42% in 2016, but dropped sharply to 1.34% in 2017. Thereafter, it experienced a strong recovery, increasing to 11.38% in 2018 and further to 16.58% in 2019. The improvement in the later years suggests better management of expenses and non-operational factors affecting net profitability.
- Return on equity (ROE)
- Return on equity followed a pattern of modest improvement with fluctuations. The ratio began at 0.72% in 2015, peaked at 2.06% in 2016, declined to 0.54% in 2017, then climbed steadily to 4.78% in 2018 and 6.49% in 2019. This trend indicates gradually increasing effectiveness in generating shareholder returns from equity.
- Return on assets (ROA)
- Return on assets showed overall positive growth despite some year-to-year changes. It increased from 0.3% in 2015 to 0.88% in 2016, fell to 0.23% in 2017, before rising significantly to 2.04% in 2018 and 2.95% in 2019. This trajectory suggests improvements in asset utilization and profitability relative to the asset base over time.
Return on Sales
Return on Investment
Gross Profit Margin
Kinder Morgan 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 millions) | ||||||
| Gross profit | ||||||
| Revenues | ||||||
| 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 ÷ Revenues
= 100 × ÷ =
- Revenue Trends
- The revenues experienced fluctuations over the five-year period. Starting at 14,403 million USD in 2015, revenues declined to 13,058 million USD in 2016, then rose to 13,705 million USD in 2017, followed by a further increase to 14,144 million USD in 2018, before decreasing again to 13,209 million USD in 2019. This pattern indicates variability in the top-line performance, with no consistent upward or downward trend but rather intermittent increases and decreases.
- Gross Profit Trends
- Gross profit decreased from 10,288 million USD in 2015 to 9,560 million USD in 2016, and continued to decline slightly to 9,360 million USD in 2017. It then reversed direction, increasing modestly to 9,723 million USD in 2018 and further to 9,946 million USD in 2019. This trend suggests some recovery in gross profitability after a period of decline.
- Gross Profit Margin Trends
- The gross profit margin demonstrated variability but showed an overall positive trajectory. Beginning at 71.43% in 2015, it increased to 73.21% in 2016 before declining to 68.3% in 2017 and slightly improving to 68.74% in 2018. By 2019, the margin rose significantly to 75.3%, marking the highest value in the period. This indicates an improvement in cost efficiency or product mix towards the end of the period, resulting in higher profitability relative to revenues despite fluctuations in absolute gross profit.
- Summary Insights
- The company exhibited variability in revenue with no clear growth trajectory. Gross profit initially declined but showed signs of recovery in the last two years analyzed. The gross profit margin, after some fluctuations, increased substantially by 2019, implying enhanced operational efficiency or improved pricing power. Overall, despite fluctuations in revenue and gross profit amounts, the improving margin towards the end of the period is a positive indicator of profitability management.
Operating Profit Margin
Kinder Morgan 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 millions) | ||||||
| Operating income | ||||||
| Revenues | ||||||
| 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 ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Income
- The operating income displayed a generally increasing trend from 2015 to 2019. There was a significant rise from 2,447 million USD in 2015 to 3,572 million USD in 2016. After a slight dip to 3,544 million USD in 2017, the operating income increased again in subsequent years, reaching 4,873 million USD in 2019. This indicates overall growth in the company's profitability from its core operations over the five-year period.
- Revenues
- Revenues showed some fluctuation during this period. Starting at 14,403 million USD in 2015, revenues decreased to 13,058 million USD in 2016, followed by a modest recovery to 13,705 million USD in 2017 and 14,144 million USD in 2018. In 2019, revenues declined again to 13,209 million USD. These variations indicate some instability in sales or service volumes, with a slight downward bias toward the end of the period.
- Operating Profit Margin
- The operating profit margin demonstrated marked improvement over the period under review. Beginning at 16.99% in 2015, the margin rose sharply to 27.35% in 2016. Although margin decreased slightly in 2017 to 25.86%, it rose again to 26.82% in 2018, and made a substantial jump to 36.89% in 2019. This suggests enhanced operational efficiency or cost management, resulting in a greater proportion of revenues being converted into operating income.
- Overall Analysis
- The company experienced growth in operating income despite fluctuations in revenues, pointing toward improvements in profitability and operational efficiency over the five years. The increase in operating profit margin, especially the significant rise in 2019, indicates successful expense control or positive changes in revenue mix. The revenue pattern, however, suggests some challenges in maintaining consistent sales growth, which could warrant further investigation.
Net Profit Margin
Kinder Morgan 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 millions) | ||||||
| Net income attributable to Kinder Morgan, Inc. | ||||||
| Revenues | ||||||
| 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 attributable to Kinder Morgan, Inc. ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Attributable to Kinder Morgan, Inc.
- The net income exhibited notable fluctuations over the observed period. Starting at $253 million in 2015, it surged to $708 million in 2016, followed by a sharp decline to $183 million in 2017. Subsequently, a significant increase was observed, reaching $1,609 million in 2018 and further rising to $2,190 million in 2019. This trend suggests considerable variability in profitability with a strong upward momentum in the latter two years.
- Revenues
- Revenues showed a mild downward trend across the five-year span. Beginning at $14,403 million in 2015, revenues decreased to $13,058 million in 2016. They slightly recovered to $13,705 million in 2017 and continued a gradual increase to $14,144 million in 2018. However, in 2019, revenues declined again to $13,209 million, indicating some volatility but generally trending below the initial level recorded in 2015.
- Net Profit Margin
- The net profit margin demonstrated significant variation, reflecting underlying changes in profitability relative to revenues. Starting at a modest 1.76% in 2015, it improved markedly to 5.42% in 2016 before dropping to 1.34% in 2017. Following this, there was a substantial increase to 11.38% in 2018, ultimately peaking at 16.58% in 2019. This pattern indicates enhanced efficiency or cost management and higher profitability relative to revenues, especially in the final two years.
Return on Equity (ROE)
Kinder Morgan Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Kinder Morgan, Inc. | ||||||
| Total Kinder Morgan, Inc.’s 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 attributable to Kinder Morgan, Inc. ÷ Total Kinder Morgan, Inc.’s stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals notable fluctuations in net income attributable to the company over the five-year period. From 2015 to 2017, net income experienced a decline, dropping from $253 million in 2015 to $183 million in 2017, with a brief peak to $708 million in 2016. However, a significant increase is observed starting in 2018, with net income surging to $1,609 million and further rising to $2,190 million in 2019.
Total stockholders’ equity shows a relatively stable trend throughout the period. Beginning at $35,119 million in 2015, it slightly decreases over the next few years to $33,636 million in 2017 before leveling off around $33,678 million in 2018 and $33,742 million in 2019. This suggests modest changes in the company’s net asset position with limited growth or depletion over these years.
The return on equity (ROE) follows a pattern consistent with net income, indicating variability in profitability relative to equity. ROE starts at a low 0.72% in 2015, peaks at 2.06% in 2016, then decreases to 0.54% in 2017. Following that, a pronounced improvement occurs in 2018 and 2019, with ROE climbing to 4.78% and 6.49% respectively, reflecting enhanced efficiency in generating returns on shareholders’ equity in the latter years.
- Net Income Trend
- Initial decline from 2015 to 2017, followed by significant increases in 2018 and 2019.
- Stockholders' Equity Trend
- Relatively stable with a slight decrease early on, then plateauing from 2017 to 2019.
- Return on Equity (ROE) Trend
- Fluctuating and generally low from 2015 to 2017, improving markedly in 2018 and 2019.
Overall, the data indicates an improvement in profitability and return efficiency in the final two years of the period despite a fairly consistent equity base. These developments suggest a positive shift in operational performance or financial management that enhances shareholder value after several years of subdued earnings and returns.
Return on Assets (ROA)
Kinder Morgan Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Kinder Morgan, Inc. | ||||||
| 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 attributable to Kinder Morgan, Inc. ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Attributable to Kinder Morgan, Inc.
- The net income shows significant volatility over the five-year period. Beginning at $253 million in 2015, it increased substantially to $708 million in 2016, then sharply decreased to $183 million in 2017. Thereafter, the net income rose markedly, reaching $1,609 million in 2018 and further increasing to $2,190 million in 2019. This indicates fluctuating profitability, followed by a strong recovery and growth in the later years.
- Total Assets
- Total assets exhibited a declining trend throughout the period. Starting at $84,104 million in 2015, assets decreased slightly year-over-year, ending at $74,157 million in 2019. This steady reduction suggests a gradual downsizing or asset divestiture strategy employed during these years.
- Return on Assets (ROA)
- ROA values demonstrate a pattern consistent with net income trends, though with overall low returns. Beginning at 0.3% in 2015, ROA increased to 0.88% in 2016, dropped to 0.23% in 2017, then improved significantly to 2.04% in 2018 and further to 2.95% in 2019. The rise in ROA towards the end of the period suggests enhanced efficiency in generating profits from the assets it retained, despite the overall decrease in total assets.