ONEOK Inc. (NYSE:OKE)

The analysis of the quarterly financial ratios reveals several notable trends in the company's performance over the observed periods.

Return on Assets (ROA)

The ROA exhibited a declining trend from early 2019 through 2020, reaching a low point in December 2020. Specifically, ROA decreased from approximately 6.47% in March 2019 to around 2.66% by the end of 2020. This decline suggests a reduction in the company's efficiency in generating profits from its asset base during this period. However, starting in 2021, there is a clear recovery and upward momentum, with ROA surpassing pre-2019 levels by the first quarter of 2023, reaching over 10%. This recovery indicates improved asset utilization and profitability in recent quarters.

Financial Leverage

Financial leverage ratios fluctuated over the time frame but generally displayed an increasing trend from early 2019 to mid-2020, peaking at 3.95 in March 2020. Following this peak, the leverage ratio showed some volatility but an overall gradual decline from around 4.0 in late 2021 to approximately 3.33 by the second quarter of 2023. This decrease suggests a modest reduction in reliance on debt to finance assets, which could indicate a strengthening of the company's capital structure and potentially lower financial risk.

Return on Equity (ROE)

The ROE mirrored the trends seen in ROA but with more pronounced changes. Initially, ROE was strong, fluctuating near 20% during 2019. It then sharply declined to below 10% in 2020, reflecting the combined effects of reduced asset profitability and changes in leverage. From 2021 onward, ROE improved significantly, climbing steadily from 18.71% in the first quarter of 2021 to above 33% by the first half of 2023. The increase beyond historic highs suggests enhanced overall profitability and efficient use of shareholders' equity, likely supported by recovering operations and favorable financial management.

In summary, the company experienced a downturn in profitability ratios during 2020, coinciding with elevated financial leverage. Since 2021, there has been a consistent rebound in profitability metrics, with ROA and ROE exceeding prior levels and a concurrent gradual reduction in financial leverage. These trends indicate a positive trajectory in operational efficiency, profitability, and balance sheet strength over the recent quarters.

The financial performance over the observed quarterly periods exhibits distinct patterns in profitability, efficiency, leverage, and overall return on equity. Each metric demonstrates fluctuations influenced by broader operational and financial dynamics.

Net Profit Margin

The net profit margin initially showed an increasing trend from 9.98% in the first quarter of 2019 to a peak of 12.58% by the end of 2019. However, there was a notable decline in 2020, reaching its lowest levels around mid-year with margins near 7.13%-7.24%. Following this downturn, margins gradually improved through 2021, though remaining below the pre-2020 peak, fluctuating mostly between 7% and 11%. The most recent quarters show a recovery with margins climbing back above 11% and reaching 12.68% by mid-2023, indicating a resurgence in profitability.

Asset Turnover

Asset turnover exhibited a general declining trend from 0.65 early in 2019 to a low point of 0.37-0.38 in late 2020, reflecting a decrease in asset efficiency. From 2021 onwards, there was a clear, steady recovery in this ratio, peaking near 0.93 in late 2022. The value slightly retreated thereafter but remained considerably higher than the lows of 2020. This upward movement suggests improved utilization of assets in generating revenues during the recent periods.

Financial Leverage

The financial leverage ratio increased from approximately 2.94 at the start of 2019 to a peak of 3.95 by early 2020, indicating a rise in the use of debt or other liabilities relative to equity. Thereafter, leverage fluctuated moderately around the high 3.0s to low 4.0 range through 2021 and 2022, showing a generally stable but elevated leverage position. Recent quarters show a gradual decrease down to about 3.33 by mid-2023, suggesting a cautious reduction in leverage levels.

Return on Equity (ROE)

ROE trends closely mirror the interplay between profit margin, asset turnover, and leverage. Starting at 19.01% in early 2019, ROE increased steadily to over 20% by the end of 2019. A sharp decline occurred in 2020, bottoming near 10%, reflecting the impact of the reduced profit margins and asset efficiency during that year. From 2021 onward, ROE improved markedly, reaching above 25% during 2022 and culminating in a significant surge exceeding 33% by mid-2023. This rise is driven by combined improvements in operational efficiency and sustained leverage, contributing to enhanced equity returns.

Overall, the data reveals an initial strong performance through 2019, disruption and weakened efficiency during 2020, followed by a robust recovery phase from 2021 to 2023. The recovery process is characterized by improvements in asset utilization and profitability, alongside a strategic reduction in financial leverage. The enhanced ROE in recent quarters highlights successful management of equity returns amid these evolving conditions.

The analysis of the financial ratios over the examined periods reveals distinct trends in operational efficiency, profitability, and financial structure. The tax burden ratio remains relatively stable throughout the period, consistently around 0.76 to 0.77, indicating a steady effective tax rate over time.

Interest Burden

This ratio exhibits notable fluctuations. Initially stable near 0.77, it declines sharply from early 2020, reaching a low point around 0.53 by the end of 2020. Thereafter, it gradually recovers, surpassing previous levels to reach approximately 0.82 in mid-2023. This pattern suggests variable interest expenses or income impacting earnings before tax during these periods.

EBIT Margin

The EBIT margin shows initial growth from approximately 16.78% in early 2019 to a peak of 21.08% by the end of that year. It then declines during 2020, reflecting potential operational challenges or margin pressures, falling to near 16%. The margin recovers variably in 2021 and dips again towards the end of 2022 before rising strongly to over 20% by mid-2023. This cyclical pattern indicates fluctuating profitability possibly influenced by market or operational conditions.

Asset Turnover

There is a clear downward trend in asset turnover from early 2019, decreasing from 0.65 to a low near 0.37 by the end of 2020, signaling reduced efficiency in generating revenues from assets. However, from 2021 onward, the ratio improves steadily, reaching approximately 0.88 by early 2023, which suggests enhanced asset utilization or growing sales relative to asset base.

Financial Leverage

The financial leverage ratio shows a gradual increase from about 2.94 in early 2019 to a peak around 4.09 in late 2021, indicating increased reliance on debt financing or other liabilities relative to equity. Following this peak, leverage trends downward, reaching approximately 3.33 by mid-2023, which may reflect deleveraging or equity growth.

Return on Equity (ROE)

ROE experiences significant variation. It starts at 19.01% in early 2019, decreasing sharply through 2020 to single digits near 10%. This decline corresponds with the periods of lower interest burden and EBIT margin. Subsequently, ROE improves strongly, surpassing 25% between 2021 and 2022 and further rising to over 33% by mid-2023. This increase suggests enhanced profitability and effective use of equity capital in the recent periods.

Overall, the financial ratios indicate a period of operational and financial stress during 2020, reflected in declining margins, asset turnover, and ROE. Recovery phases are evident from 2021 onwards, with improving profitability and asset efficiency, alongside a reduction in financial leverage. The consistent tax burden ratio provides a stable backdrop to these changes in operational and financial performance.

Net Profit Margin

The net profit margin exhibited a fluctuating trend over the reported periods. Initially, the margin showed a steady increase during 2019, peaking at 12.58% in the fourth quarter. However, in 2020, the margin declined significantly, reaching a low point around 7.13% to 7.24% in the middle quarters. A recovery phase followed in 2021, with margins rising again to about 11.91% in the second quarter before declining somewhat toward the end of 2021. In 2022, the margin remained relatively low, fluctuating between roughly 7.1% and 8.01%, but it rebounded notably in early 2023, reaching 12.68% by the second quarter. Overall, the net profit margin's variability suggests sensitivity to external or operational factors influencing profitability, with a pronounced downturn during 2020 followed by a gradual recovery.

Asset Turnover

Asset turnover experienced a general downward trend from early 2019 through 2020, declining from 0.65 to a low of approximately 0.37. This indicates a decreasing efficiency in utilizing assets to generate revenue during this period. Starting in the fourth quarter of 2020 and continuing through 2022, asset turnover showed a consistent upward trajectory, peaking at 0.93 in the third quarter of 2022. The value then slightly decreased to 0.8 by the second quarter of 2023. This recovery suggests an improvement in asset utilization efficiency following the earlier decline, though it did not return to the initial levels seen in early 2019.

Return on Assets (ROA)

Return on assets mirrored the trends observed in net profit margin and asset turnover but with more distinct phases. ROA was relatively stable in 2019, maintaining values near 5.86% before sharply dropping during 2020 to a range near 2.66% to 3.64%, which corresponds to the period of decreased profitability and asset turnover. A recovery was observed starting in the first quarter of 2021, with ROA increasing steadily throughout 2021 and 2022, reaching above 7.00%. The most notable improvement occurred in early 2023, with ROA peaking over 10% by the second quarter. This reflects a strengthening overall performance in terms of ROI relative to the company's assets, coinciding with both improved margins and asset utilization.

The analysis of the financial ratios and margins over the observed periods reveals notable trends and fluctuations in operational efficiency, profitability, and cost management.

Tax Burden

The tax burden ratio remained remarkably stable throughout the periods, consistently around 0.76 to 0.77. This indicates a steady proportion of earnings retained after taxes, suggesting consistent tax management and minimal impact from tax rate changes or unusual tax events.

Interest Burden

The interest burden ratio showed a significant decline from approximately 0.77 in early 2019 to a low near 0.53 by the end of 2020, reflecting an increasing interest expense relative to earnings before interest and taxes. However, a recovery trend is seen from 2021 onward, improving steadily to around 0.82 by mid-2023. This pattern suggests fluctuating borrowing costs or interest expense burden with recent improvement in operational income relative to interest costs.

EBIT Margin

EBIT margin experienced an initial increase from 16.78% at the start of 2019 to a peak of 21.08% at the end of that year, indicating improving operational profitability. This was followed by a drop in 2020 to around 16-17%, likely due to external or internal pressures affecting earnings. Margins further declined during 2021 and 2022, reaching lows of approximately 12-13%, but showed a notable recovery in early 2023 approaching over 20%. This trend reflects volatility, with recent quarters indicating improved operational efficiency or favorable market conditions.

Asset Turnover

Asset turnover ratio declined steadily from 0.65 in early 2019 to a low of approximately 0.37 at the end of 2020, suggesting reduced efficiency in utilizing assets to generate revenue. Starting in 2021, there is a strong recovery trend, with the ratio climbing up to 0.93 by late 2022 before slightly decreasing to 0.8 by mid-2023. This recovery indicates improved asset usage and potential growth in sales relative to asset levels in recent periods.

Return on Assets (ROA)

ROA exhibited a decreasing trend from a high of 6.47% in early 2019 down to around 2.66% at the end of 2020, reflecting diminished profitability on asset investments, likely influenced by lower EBIT margins and asset turnover. Subsequently, a meaningful recovery is observed, with ROA increasing to 10.12% by mid-2023. This improvement corresponds with the enhancements noted in EBIT margin and asset turnover, indicating overall stronger asset profitability in recent periods.

In summary, the company experienced a challenging period in 2020 with declines in interest burden, EBIT margin, asset turnover, and ROA, possibly related to external market conditions or operational difficulties. Since 2021, there is a clear recovery trend across several key indicators, suggesting improved operational performance, better asset utilization, and enhanced profitability.

Tax Burden

The tax burden ratio remained relatively stable throughout the observed periods, fluctuating slightly around 0.76 to 0.77. This stability suggests consistent tax management and effective handling of tax obligations, with no significant changes impacting this metric over time.

Interest Burden

There was a notable decline in the interest burden ratio beginning in early 2020, dropping from approximately 0.77 in 2019 to a low near 0.53 by the end of 2020. This indicates increased interest expenses relative to earnings before interest and taxes during that period. Starting from 2021, the interest burden showed a recovery trend, gradually increasing and reaching about 0.82 by mid-2023, which implies improved management or reduction of interest costs relative to operating earnings in recent quarters.

EBIT Margin

The EBIT margin experienced fluctuations with an overall decreasing trend from early 2019 to late 2022. Initially, margins were higher, peaking around 21.08% at the end of 2019, followed by a decline reaching a low point near 12.38% in the third quarter of 2022. A marked recovery appeared in 2023, with margins improving again to over 20%, suggesting enhanced operational efficiency or favorable market conditions in recent quarters.

Net Profit Margin

Net profit margins followed a pattern similar to the EBIT margin. From 2019 through 2020, margins declined significantly, dropping from near 12.58% in late 2019 to a low of approximately 7.1% in late 2022. However, from early 2023 onwards, net profit margins improved steadily, reaching around 12.68% by mid-2023. This recovery indicates strengthening profitability possibly due to cost controls, improved revenue generation, or reduced financial burdens following previous challenges.