Analysis of Profitability Ratios
Quarterly Data
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Cash Flow Statement
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
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Profitability Ratios (Summary)
National Oilwell Varco Inc., profitability ratios (quarterly data)
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
The financial performance indicators exhibit a clear pattern over the observed quarters, reflecting notable shifts in profitability and efficiency ratios.
- Gross Profit Margin
- This margin demonstrated a steady decline over the period, starting at 30.28% and decreasing consistently to 13.18% by the end of the last quarter. The downward trend suggests increasing costs of goods sold or pricing pressures affecting the company's core profitability over time.
- Operating Profit Margin
- The operating profit margin also showed a decreasing trend, beginning at 20.27% and remaining relatively stable through mid-period before deteriorating sharply in the last quarters with negative margins reaching -18.68%. This indicates a significant erosion of operational profitability, potentially due to increased operating expenses or reduced revenue efficiency.
- Net Profit Margin
- The net profit margin followed a similar trajectory, starting from 13.87% and declining steadily to negative territory, with the last recorded figure at -17.14%. The pattern points to rising costs and/or expenses overshadowing the company’s earning capacity, culminating in losses during the recent periods.
- Return on Equity (ROE)
- ROE started at a moderate level of 11.91% but gradually decreased throughout the quarters, turning negative in the final periods, ending at -10.57%. This shift reflects a decline in the company’s ability to generate returns on shareholders’ equity, possibly due to reduced profitability and operational challenges.
- Return on Assets (ROA)
- ROA followed a steady path from 8.34% down to -7.16%, indicating decreasing efficiency in utilizing assets to generate earnings. The diminishing returns and eventual negative figures highlight operational inefficiencies impacting asset productivity.
Overall, the data reveals a consistent and significant downturn in profitability and efficiency metrics over the timeframe. Margins and returns indicators uniformly trend downward, culminating in negative results in the most recent quarters. This pattern suggests the company experienced growing financial pressures, potentially from cost increases, market challenges, or operational inefficiencies, leading to reduced earnings and decreased returns to shareholders and asset utilization.
Return on Sales
Return on Investment
Gross Profit Margin
National Oilwell Varco Inc., gross profit margin calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Profitability Ratio | ||||||||||||||||||||||||
| Gross profit margin1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Gross Profit Margin, Competitors2 | ||||||||||||||||||||||||
| SLB N.V. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Gross profit margin = 100
× (Gross profitQ2 2016
+ Gross profitQ1 2016
+ Gross profitQ4 2015
+ Gross profitQ3 2015)
÷ (RevenueQ2 2016
+ RevenueQ1 2016
+ RevenueQ4 2015
+ RevenueQ3 2015)
= 100 × ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
- Revenue Trends
- Revenue displayed a generally upward trend from March 2012 through December 2013, increasing from 4,303 million US dollars to a peak of 6,172 million US dollars. However, starting in 2014, revenue showed a significant decline, dropping from 4,889 million US dollars in the first quarter of 2014 to 1,724 million US dollars by the second quarter of 2016. This represents a substantial contraction in the company’s sales over the analyzed period.
- Gross Profit Development
- Gross profit closely mirrored the revenue trend, rising steadily from 1,267 million US dollars in March 2012 to a high of 1,536 million US dollars at the end of 2014. After this period, gross profit decreased sharply, reaching a low of 35 million US dollars by June 2016. The decline after 2014 indicates deteriorating profitability that intensified into 2016.
- Gross Profit Margin Analysis
- The gross profit margin showed a consistent downward trajectory over the period analyzed. It started at 30.28% in March 2012 and declined gradually, with some minor fluctuations, to 24.0% by December 2013. Thereafter, the margin hovered around mid-20% levels throughout 2014 and into early 2015 before falling more steeply to 13.18% by June 2016. This reduction in margin suggests increasing costs relative to revenues or pricing pressures affecting profitability.
- Overall Financial Performance Summary
- The company experienced growth in both revenue and gross profit until late 2013 to early 2014, followed by a period of significant financial contraction extending through mid-2016. Alongside diminishing revenue and gross profit figures, the gross profit margin contracted steadily, signaling worsening operational efficiency or market challenges. The data reflects a challenging environment for the company post-2013 that negatively impacted both sales volume and profitability ratios.
Operating Profit Margin
National Oilwell Varco Inc., operating profit margin calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Operating profit (loss) | ||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Profitability Ratio | ||||||||||||||||||||||||
| Operating profit margin1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Operating Profit Margin, Competitors2 | ||||||||||||||||||||||||
| SLB N.V. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Operating profit margin = 100
× (Operating profit (loss)Q2 2016
+ Operating profit (loss)Q1 2016
+ Operating profit (loss)Q4 2015
+ Operating profit (loss)Q3 2015)
÷ (RevenueQ2 2016
+ RevenueQ1 2016
+ RevenueQ4 2015
+ RevenueQ3 2015)
= 100 × ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
- Operating Profit (Loss) Trend
- The operating profit demonstrated a generally positive trend from early 2012 through the end of 2014, with values gradually increasing from 877 million USD in March 2012 to a peak of 988 million USD in September 2014. Starting in 2015, a significant decline began, dropping sharply to 234 million USD in September 2015, and further decreasing to a substantial loss of 1,632 million USD by December 2015. The downward trend continued into 2016, albeit with a smaller magnitude of losses compared to the late 2015 period.
- Revenue Trend
- Revenue increased steadily from 4,303 million USD in March 2012 to 6,172 million USD in December 2013, indicating a phase of growth. This was followed by a decline commencing in early 2014, with revenue dropping to 5,709 million USD by December 2014. A sharper decrease occurred through 2015 and 2016, falling from 4,820 million USD in March 2015 to 1,724 million USD in June 2016. This decline in revenue aligns with the observed reduction in operating profit.
- Operating Profit Margin Trend
- The operating profit margin showed a gradual decline from 20.27% in March 2012 to 14.97% by December 2013, reflecting a reduction in profitability relative to revenue despite increasing absolute profit values during that period. Margins stabilized somewhat around 16% through 2014 but began deteriorating significantly in 2015. By December 2015, the margin turned negative to -2.64%, worsening further to -18.68% by June 2016, indicating losses exceeding revenue on operating activities and a severe decrease in operational efficiency and profitability.
- Overall Insights
- The data reveals a company experiencing growth in revenue and profitability through 2013 and into early 2014, followed by a prolonged and pronounced downturn starting in 2015. The simultaneous decline in revenue and operating profit margin suggests both decreasing sales volumes or prices and worsening operating efficiency. The transition to large operating losses and negative margins by late 2015 and early 2016 indicates significant operational and possibly market challenges during this period.
Net Profit Margin
National Oilwell Varco Inc., net profit margin calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Net income (loss) attributable to Company | ||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Profitability Ratio | ||||||||||||||||||||||||
| Net profit margin1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Net Profit Margin, Competitors2 | ||||||||||||||||||||||||
| SLB N.V. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Net profit margin = 100
× (Net income (loss) attributable to CompanyQ2 2016
+ Net income (loss) attributable to CompanyQ1 2016
+ Net income (loss) attributable to CompanyQ4 2015
+ Net income (loss) attributable to CompanyQ3 2015)
÷ (RevenueQ2 2016
+ RevenueQ1 2016
+ RevenueQ4 2015
+ RevenueQ3 2015)
= 100 × ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
The financial data reveals several notable trends in the company's quarterly performance over the examined period.
- Net Income (Loss) attributable to Company
- The net income exhibited a strong positive trend from early 2012 through late 2014, generally increasing from $606 million in March 2012 to a peak of $699 million in September 2014. From the end of 2014 onwards, net income experienced a significant and sustained decline, turning negative by the final quarter of 2015 and remaining negative through mid-2016 with losses reaching as high as -$1,523 million in December 2015. This sharp downturn indicates a period of financial distress following several years of stability and growth.
- Revenue
- Revenue followed a somewhat similar pattern. It increased steadily from $4,303 million in March 2012 to approximately $6,172 million in December 2013. However, starting in 2014, revenue began to decline gradually, with a more pronounced and continuous decrease observable from early 2015 onwards, falling consistently each quarter to $1,724 million by June 2016. This decline in revenue underscores weakening sales or demand factors aligning with the negative net income trends.
- Net Profit Margin
- The net profit margin mirrored movements in income and revenue but with more pronounced fluctuations in the latter periods. Between 2012 and 2014, the margin remained relatively stable, ranging between approximately 10% and 14%, indicating consistent profitability relative to revenue. From 2015 onward, the margin deteriorated sharply from 10.4% in Q1 2015 to negative figures by late 2015, reaching -17.14% by mid-2016. This negative margin reflects operational losses and a decline in efficiency or higher costs surpassing revenues during this period.
Overall, the data suggests that the company enjoyed a period of growth and solid profitability from 2012 through 2013, followed by revenue declines and deteriorating profitability starting in 2014, culminating in significant losses from late 2015 through mid-2016. The concurrent downward trends in net income, revenue, and profit margin indicate substantial financial challenges in the later quarters analyzed.
Return on Equity (ROE)
National Oilwell Varco Inc., ROE calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Net income (loss) attributable to Company | ||||||||||||||||||||||||
| Total Company stockholders’ equity | ||||||||||||||||||||||||
| Profitability Ratio | ||||||||||||||||||||||||
| ROE1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| ROE, Competitors2 | ||||||||||||||||||||||||
| SLB N.V. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
ROE = 100
× (Net income (loss) attributable to CompanyQ2 2016
+ Net income (loss) attributable to CompanyQ1 2016
+ Net income (loss) attributable to CompanyQ4 2015
+ Net income (loss) attributable to CompanyQ3 2015)
÷ Total Company stockholders’ equity
= 100 × ( + + + )
÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends and shifts over the observed periods.
- Net Income (Loss) Attributable to the Company
- The net income demonstrated a generally positive trend from March 2012 through December 2014, fluctuating within a range of approximately $500 million to nearly $700 million per quarter. However, starting from March 2015, a clear downtrend emerged, with values sharply declining and turning into substantial losses by the end of 2015 and continuing into 2016. The loss peaked notably in December 2015 with a negative $1,523 million, indicating a severe deterioration in profitability during this period.
- Total Company Stockholders’ Equity
- Stockholders’ equity increased steadily from $18,416 million in March 2012 to a peak of $22,230 million in December 2013. After this peak, equity saw a gradual decline, falling to $16,118 million by June 2016. This downward trend in equity aligns with the period of financial losses, suggesting that the negative earnings had a deleterious effect on the company’s equity base.
- Return on Equity (ROE)
- The ROE indicated strong performance between 2012 and 2014, consistently maintaining double-digit percentages mostly above 10%. ROE peaked around 12.31% in mid-2012 and again in late 2014. From 2015 onward, there was a marked decline in ROE, correlating with the declining net income. The ROE dropped significantly into negative territory by 2016, reaching as low as -10.57% by June 2016, reflecting the company's substantial losses in that timeframe and a weakened ability to generate return on shareholder investment.
Overall, the company displayed robust profitability and equity growth through 2013 and 2014, followed by a pronounced decline beginning in 2015, evidenced by decreasing net income, shrinking equity, and sharply falling ROE. This deterioration signals significant operational or market challenges impacting financial performance and shareholder value during the latter periods.
Return on Assets (ROA)
National Oilwell Varco Inc., ROA calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Net income (loss) attributable to Company | ||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||
| Profitability Ratio | ||||||||||||||||||||||||
| ROA1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| ROA, Competitors2 | ||||||||||||||||||||||||
| SLB N.V. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
ROA = 100
× (Net income (loss) attributable to CompanyQ2 2016
+ Net income (loss) attributable to CompanyQ1 2016
+ Net income (loss) attributable to CompanyQ4 2015
+ Net income (loss) attributable to CompanyQ3 2015)
÷ Total assets
= 100 × ( + + + )
÷ =
2 Click competitor name to see calculations.
- Net Income Trend
- The net income exhibited relatively stable performance from March 2012 through December 2014, with values consistently ranging between approximately 500 and 700 million US dollars. This stability was interrupted beginning in 2015, presenting a marked decline that culminated in significant losses by the end of 2015 and continuing throughout 2016. The shift from positive earnings to losses suggests a considerable deterioration in profitability over the observed period.
- Total Assets Trend
- Total assets showed a gradual increase from March 2012 to December 2013, reaching their highest levels in this interval. However, starting from early 2014, total assets began to decline steadily through mid-2016. This decline may indicate asset divestiture, depreciation, or other balance sheet contractions, reflecting changes in investment or operational strategies during this time frame.
- Return on Assets (ROA) Trend
- ROA remained robust and relatively stable around the 7-8% range from 2012 through the end of 2014, indicating efficient asset utilization in generating income. From early 2015 onwards, ROA demonstrated a steady decline, eventually turning negative in 2016. The negative ROA in 2016 aligns with the recorded net losses and shrinking asset base, underscoring deteriorating profitability and reduced returns on the company's asset base.
- Overall Financial Performance Insights
- The financial data reflects a period of solid operational performance and asset growth through 2013 and 2014, followed by a downturn beginning in 2015. The transition from profit to loss, combined with decreasing total assets and negative ROA, indicates potential challenges such as market conditions, operational issues, or strategic shifts adversely affecting financial health. These trends highlight a need for close examination of the underlying causes and consideration of corrective actions to restore profitability and asset efficiency.