Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Marathon Oil Corp., profitability ratios
Based on: 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), 10-K (reporting date: 2017-12-31).
The analysis of the financial performance over the five-year period reveals significant volatility in profitability and returns for the company.
- Operating Profit Margin
- The operating profit margin exhibited notable fluctuations, starting with a negative margin of -3.04% in 2017, improving sharply to a strong 28.24% in 2018. It then declined to 12.56% in 2019, followed by a significant negative margin of -38.1% in 2020, before recovering to a positive 23.35% in 2021. This pattern suggests periods of both operational challenges and recovery, with 2020 standing out as an especially challenging year.
- Net Profit Margin
- Net profit margin followed a similar pattern, beginning with a deep negative margin of -130.87% in 2017, improving markedly to 18.57% in 2018. This was then followed by a decline to 9.48% in 2019, a substantial negative margin of -46.85% in 2020, and a partial recovery to 16.89% in 2021. The extreme negative margin in 2017 and 2020 points to considerable net losses during these periods, possibly due to extraordinary expenses or impairments.
- Return on Equity (ROE)
- ROE showed a negative return of -48.88% in 2017, which improved to a positive 9.04% in 2018. It then decreased to 3.95% in 2019, dropped again to -13.74% in 2020, and rose to 8.85% in 2021. The pattern mirrors the operating and net profit margins, indicating that shareholders faced significant losses particularly in 2017 and 2020 but enjoyed gains in other years.
- Return on Assets (ROA)
- ROA also demonstrated volatility, starting at -26.00% in 2017, improving to 5.14% in 2018, declining to 2.37% in 2019, falling back to -8.08% in 2020, and then recovering to 5.57% in 2021. These fluctuations align with the overall profitability trends and suggest inconsistent asset utilization efficiency across the period.
Overall, the data reflect a cyclical financial performance with significant profitability and return downturns in 2017 and 2020, which were followed by recoveries in the subsequent years. The negative margins and returns in those years may indicate exposure to sector-specific risks or extraordinary challenges, while the improvements in other years suggest resilience and capability to restore profitability.
Return on Sales
Return on Investment
Operating Profit Margin
Marathon Oil Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Income (loss) from operations | 1,308) | (1,180) | 636) | 1,667) | (133) | |
| Revenues | 5,601) | 3,097) | 5,063) | 5,902) | 4,373) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 23.35% | -38.10% | 12.56% | 28.24% | -3.04% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Chevron Corp. | 14.81% | -6.22% | — | — | — | |
| ConocoPhillips | 29.84% | -12.74% | — | — | — | |
| Exxon Mobil Corp. | 11.91% | -14.85% | — | — | — | |
| Occidental Petroleum Corp. | 17.59% | -79.89% | — | — | — | |
| Operating Profit Margin, Sector | ||||||
| Oil, Gas & Consumable Fuels | 14.73% | -15.83% | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Energy | 14.61% | -18.01% | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Operating profit margin = 100 × Income (loss) from operations ÷ Revenues
= 100 × 1,308 ÷ 5,601 = 23.35%
2 Click competitor name to see calculations.
- Income (loss) from operations
- The operating income exhibits significant volatility over the five-year period. Starting with a loss of $133 million in 2017, it sharply improved to a positive $1,667 million in 2018, indicating a strong operational turnaround. However, this was followed by a decline to $636 million in 2019 and a major loss of $1,180 million in 2020. The trend reversed again in 2021 with income from operations rising to $1,308 million, showing recovery after the pandemic-affected year.
- Revenues
- Revenue figures demonstrate a fluctuating yet generally positive trend except for a notable dip in 2020. Revenues increased from $4,373 million in 2017 to a peak of $5,902 million in 2018, then declined to $5,063 million in 2019. The most significant contraction occurred in 2020, with revenues dropping to $3,097 million, likely impacted by external challenges. Revenues partially rebounded in 2021 to $5,601 million, approaching pre-2020 levels.
- Operating profit margin
- The operating profit margin correlates strongly with the trends in income from operations and revenues, reflecting marked volatility. In 2017, the margin was negative at -3.04%, turning substantially positive to 28.24% in 2018, indicative of improved operational efficiency or favorable market conditions. This margin contracted to 12.56% in 2019 and plunged to -38.1% in 2020, coinciding with the sharp operating loss and revenue decline that year. Recovery is evidenced in 2021 with a positive margin of 23.35%, supporting the return to profitability in operations.
- Overall Analysis
- The data reveal a cyclical pattern influenced by external and possibly internal factors, most notably the sharp downturn in 2020, which is mirrored across all key operational metrics. The fluctuations in income from operations and operating profit margin suggest sensitivity to market conditions affecting operational profitability. Despite the volatility, the company demonstrated resilience with recovery in 2021, regaining substantial levels of revenue growth and profitability. This pattern indicates exposure to industry-specific risks but also an ability to adapt and recover from adverse circumstances.
Net Profit Margin
Marathon Oil Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) | 946) | (1,451) | 480) | 1,096) | (5,723) | |
| Revenues | 5,601) | 3,097) | 5,063) | 5,902) | 4,373) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 16.89% | -46.85% | 9.48% | 18.57% | -130.87% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Chevron Corp. | 10.04% | -5.87% | — | — | — | |
| ConocoPhillips | 17.63% | -14.38% | — | — | — | |
| Exxon Mobil Corp. | 8.33% | -12.57% | — | — | — | |
| Occidental Petroleum Corp. | 8.95% | -83.28% | — | — | — | |
| Net Profit Margin, Sector | ||||||
| Oil, Gas & Consumable Fuels | 9.73% | -14.70% | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Energy | 9.67% | -16.81% | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net profit margin = 100 × Net income (loss) ÷ Revenues
= 100 × 946 ÷ 5,601 = 16.89%
2 Click competitor name to see calculations.
The financial data over the five-year period demonstrates significant volatility in the company's profitability and revenues, marked by periods of both loss and profit.
- Net Income (Loss)
- The net income shows a dramatic fluctuation. In 2017, the company experienced a substantial loss of $5,723 million. This was followed by a recovery in 2018 with a profit of $1,096 million. The earnings in 2019 decreased to $480 million but remained positive. In 2020, the company returned to a loss position of $1,451 million. By 2021, the net income rebounded again to a profit of $946 million, indicating repeated swings between profitability and losses.
- Revenues
- Revenues increased from $4,373 million in 2017 to $5,902 million in 2018, reaching a peak. However, in 2019, revenues decreased to $5,063 million and dropped significantly to $3,097 million in 2020, likely reflecting challenging market conditions. In 2021, revenues again showed recovery, rising to $5,601 million. This pattern reflects a substantial contraction in 2020 with a notable rebound the following year.
- Net Profit Margin
- The net profit margin mirrors the net income trend, beginning with a heavily negative margin of -130.87% in 2017, indicating deep losses relative to revenue. The margin improved markedly to 18.57% in 2018, followed by a decrease to 9.48% in 2019. In 2020, the margin turned negative again to -46.85%, underscoring a difficult year with losses exceeding 40% of revenues. By 2021, the profit margin had improved to 16.89%, signaling a recovery in operational profitability.
Overall, the data reveals cyclical financial performance with significant challenges leading to losses in 2017 and 2020. Revenue and profitability showed strong rebounds in the years following these losses. The volatility suggests exposure to external factors impacting earnings and necessitates attentive management of operational efficiency and cost control to mitigate negative impacts in future periods.
Return on Equity (ROE)
Marathon Oil Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) | 946) | (1,451) | 480) | 1,096) | (5,723) | |
| Stockholders’ equity | 10,686) | 10,561) | 12,153) | 12,128) | 11,708) | |
| Profitability Ratio | ||||||
| ROE1 | 8.85% | -13.74% | 3.95% | 9.04% | -48.88% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Chevron Corp. | 11.24% | -4.21% | — | — | — | |
| ConocoPhillips | 17.79% | -9.05% | — | — | — | |
| Exxon Mobil Corp. | 13.67% | -14.28% | — | — | — | |
| Occidental Petroleum Corp. | 11.42% | -79.85% | — | — | — | |
| ROE, Sector | ||||||
| Oil, Gas & Consumable Fuels | 13.14% | -13.50% | — | — | — | |
| ROE, Industry | ||||||
| Energy | 13.12% | -16.04% | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
ROE = 100 × Net income (loss) ÷ Stockholders’ equity
= 100 × 946 ÷ 10,686 = 8.85%
2 Click competitor name to see calculations.
- Net Income (Loss)
- The net income displayed significant volatility over the five-year period. In 2017, there was a substantial loss of $5,723 million, followed by a positive turnaround to $1,096 million in 2018. This was succeeded by a drop to $480 million in 2019, then a return to a loss of $1,451 million in 2020. The year 2021 saw another recovery to a positive net income of $946 million. The data indicate a pattern of fluctuating profitability with notable swings between losses and gains.
- Stockholders' Equity
- Stockholders' equity remained relatively stable throughout the period, ranging from approximately $10,561 million to $12,153 million. A gradual decline is observable from 2019 onward, with equity decreasing from $12,153 million in 2019 to $10,561 million in 2020, then experiencing a slight recovery to $10,686 million in 2021. The stability of equity contrasts with the volatility in net income, suggesting limited equity dilution or issuance during the period.
- Return on Equity (ROE)
- ROE mirrored the trends in net income, showing high volatility and considerable swings. The company experienced a deeply negative ROE of -48.88% in 2017, indicating poor profit generation relative to equity. In 2018, ROE turned positive to 9.04%, then weakened to 3.95% in 2019. The year 2020 again showed negative performance at -13.74%, before recovering to 8.85% in 2021. This pattern reflects the fluctuating profitability and suggests challenges in consistently generating returns for shareholders.
Return on Assets (ROA)
Marathon Oil Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) | 946) | (1,451) | 480) | 1,096) | (5,723) | |
| Total assets | 16,994) | 17,956) | 20,245) | 21,321) | 22,012) | |
| Profitability Ratio | ||||||
| ROA1 | 5.57% | -8.08% | 2.37% | 5.14% | -26.00% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Chevron Corp. | 6.52% | -2.31% | — | — | — | |
| ConocoPhillips | 8.91% | -4.31% | — | — | — | |
| Exxon Mobil Corp. | 6.80% | -6.74% | — | — | — | |
| Occidental Petroleum Corp. | 3.09% | -18.52% | — | — | — | |
| ROA, Sector | ||||||
| Oil, Gas & Consumable Fuels | 6.59% | -6.36% | — | — | — | |
| ROA, Industry | ||||||
| Energy | 6.48% | -7.40% | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
ROA = 100 × Net income (loss) ÷ Total assets
= 100 × 946 ÷ 16,994 = 5.57%
2 Click competitor name to see calculations.
- Net Income (Loss)
- The net income experienced significant volatility over the five-year period. In 2017, there was a substantial net loss of $5,723 million, followed by a rebound to a net income of $1,096 million in 2018. The figure then declined to $480 million in 2019 and dropped again to a net loss of $1,451 million in 2020. By 2021, the company returned to profitability with net income of $946 million. This pattern indicates considerable fluctuations in profitability, with losses occurring primarily in 2017 and 2020.
- Total Assets
- The total assets showed a consistent declining trend throughout the period. Starting at $22,012 million in 2017, assets decreased steadily each year to reach $16,994 million by the end of 2021. This continuous reduction implies asset divestitures, depreciation, or other factors reducing the asset base over time.
- Return on Assets (ROA)
- ROA followed a pattern consistent with net income trends but with pronounced volatility. In 2017, the ROA was negative at -26%, reflecting the large net loss. It improved to positive values in 2018 (5.14%) and 2019 (2.37%), before declining again to a negative -8.08% in 2020. The ROA recovered to 5.57% in 2021, the highest positive value within the period. This reflects fluctuations in profitability relative to the asset base, with negative returns in years associated with net losses.
- Overall Trends and Insights
- The data reveals a business facing considerable financial instability with alternating periods of profit and loss. The consistent decline in total assets suggests a shrinking asset base which may impact future earnings capacity. The ROA volatility highlights challenges in generating consistent returns on the existing assets. The recovery of net income and ROA in 2021 indicates a positive turnaround after a difficult fiscal year in 2020, but the overall pattern suggests a need for strategies to stabilize profitability and manage asset utilization effectively.