Occidental Petroleum Corp. (NYSE:OXY)

Return on Assets (ROA)

The Return on Assets (ROA) exhibits significant variation over the analyzed period. In 2020, the ROA was notably negative at -18.52%, indicating inefficiency in generating profit from assets. A marked recovery is visible in 2021 with a positive ROA of 3.09%, followed by a peak in 2022 at 18.32%. However, this upward trend moderates in subsequent years, decreasing to 6.35% in 2023 and further to 3.58% in 2024, suggesting a declining asset profitability after the peak in 2022.

Financial Leverage

Financial leverage shows a steady downward trend from 4.31 in 2020 to approximately 2.41 in 2022, implying a reduction in the extent of debt relative to equity held by the company. This ratio then stabilizes, with minor increases to 2.45 in 2023 and 2.5 in 2024, indicating more conservative leverage management after a significant deleveraging phase.

Return on Equity (ROE)

ROE follows a pattern similar to ROA but with amplified fluctuations. Starting at a deeply negative value of -79.85% in 2020, the company experienced a strong recovery to 11.42% in 2021 and a substantial peak at 44.22% in 2022. Subsequently, the ROE declines sharply to 15.52% in 2023 and further to 8.95% in 2024. This pattern suggests a volatile but improving return on shareholders' equity over the period, with the highest profitability recorded in 2022 but lessening returns in the final two years examined.

Net Profit Margin

The net profit margin exhibited significant fluctuation over the examined periods. In 2020, it was deeply negative at -83.28%, indicating substantial losses. There was a strong recovery in 2021, becoming positive at 8.95%, followed by a peak at 36.32% in 2022. However, the margin declined noticeably in the subsequent years, falling to 16.62% in 2023 and further down to 11.43% in 2024. This suggests volatility in profitability and potential challenges in maintaining high profit levels following a peak in 2022.

Asset Turnover

Asset turnover showed an overall increasing trend from 0.22 in 2020 to 0.5 in 2022, reflecting improved efficiency in generating sales from assets. Post-2022, the ratio declined to 0.38 in 2023 and then to 0.31 in 2024, signaling a reduction in asset utilization efficiency after a peak. This decrease could indicate either a slowdown in sales growth relative to assets or an increase in asset base not matched by proportional revenue increases.

Financial Leverage

Financial leverage decreased steadily from a high of 4.31 in 2020 to 2.41 in 2022, demonstrating a reduction in dependence on debt financing or a strengthening equity base. Following 2022, leverage stabilized with minor increases to 2.45 in 2023 and 2.5 in 2024. The initial decline indicates efforts towards deleveraging, while the later slight increases suggest a stabilization in the capital structure.

Return on Equity (ROE)

Return on equity mirrored the net profit margin’s trend closely. From a deeply negative -79.85% in 2020, ROE improved markedly to 11.42% in 2021 and sharply increased to 44.22% in 2022. However, it saw a decline in the subsequent years, dropping to 15.52% in 2023 and 8.95% in 2024. This pattern indicates strong but volatile returns to shareholders, with peak performance in 2022 followed by a setback in later years.

Tax Burden

The tax burden ratio shows a noticeable improvement from 0.72 in 2021 to a peak of 0.94 in 2022, indicating a higher proportion of earnings retained after taxes during that year. However, it declines again in 2023 and 2024, returning to values close to the initial level observed in 2021.

Interest Burden

The interest burden demonstrates a positive trend from 0.67 in 2021 up to 0.93 in 2022, illustrating reduced interest expenses relative to operating earnings. This ratio decreases slightly thereafter, moving to 0.87 in 2023 and further to 0.78 in 2024, indicating somewhat increased interest costs or reduced operating profits impacting net income.

EBIT Margin

The EBIT margin shows a significant turnaround over the period. It moves from a deeply negative figure in 2020 (-87.48%) to positive profitability in 2021 (18.69%), climbing to a high of 41.35% in 2022. This is followed by a decline to 26.1% and then 20.22% in 2023 and 2024, respectively, reflecting a reduction in operating profitability though still maintaining positive margins.

Asset Turnover

Asset turnover improves steadily from 0.22 in 2020 to a high of 0.50 in 2022, indicating increased efficiency in generating sales from assets. After 2022, the ratio decreases to 0.38 in 2023 and 0.31 in 2024, suggesting a relative decline in asset utilization.

Financial Leverage

Financial leverage decreases considerably from 4.31 in 2020 to 2.41 in 2022, signifying a reduction in reliance on debt financing. It then shows a slight upward trend to 2.45 in 2023 and 2.5 in 2024, indicating a modest increase in leverage but remaining substantially below the 2020 level.

Return on Equity (ROE)

ROE undergoes dramatic changes over the period, starting with a large negative value (-79.85%) in 2020. It recovers to 11.42% in 2021, peaks at 44.22% in 2022, indicating strong shareholder returns, and then declines to 15.52% and 8.95% in 2023 and 2024, respectively. This decline reflects reduced profitability or increased equity base impacting returns to shareholders.

The financial data indicates notable fluctuations in key performance metrics over the examined periods. The analysis below emphasizes the observed trends and underlying implications of these changes.

Net Profit Margin (%)

The net profit margin exhibits a significant recovery trend from a deeply negative margin of -83.28% at the end of 2020 to a positive 8.95% in 2021. This transition suggests an initial improvement in profitability. The margin further increases markedly to 36.32% by the end of 2022, pointing to a period of enhanced operational efficiency or favorable market conditions. However, subsequent years show a declining trend with margins dropping to 16.62% in 2023 and further to 11.43% in 2024. This decline may reflect increased costs, pricing pressure, or shifts in business dynamics reducing profitability despite remaining positive.

Asset Turnover (ratio)

The asset turnover ratio rises steadily from 0.22 in 2020 to 0.35 in 2021 and peaks at 0.50 in 2022, indicating improved efficiency in generating sales from assets during this period. After 2022, there is a notable decrease to 0.38 in 2023 and further down to 0.31 in 2024. This reduction suggests a deterioration in asset utilization efficiency, implying either increased asset base without proportional revenue growth or a decline in sales productivity relative to asset levels.

Return on Assets (ROA) (%)

Return on assets mirrors the trends observed in profitability and efficiency. The metric starts at a substantial negative of -18.52% in 2020, rising to a positive 3.09% in 2021. It then reaches a peak of 18.32% in 2022, demonstrating strong asset profitability. Similar to other metrics, ROA declines to 6.35% in 2023 and 3.58% in 2024, indicating that despite maintaining positive returns, the effectiveness of assets in generating net income diminishes post-2022.

In summary, the data reveal a period of recovery and improvement across profitability, efficiency, and asset returns culminating in 2022, followed by a gradual decline in these performance metrics through to 2024. The initial improvement indicates successful operational or market conditions resilience, while the subsequent downturn suggests emerging challenges impacting profitability and asset utilization.

Tax Burden

The tax burden ratio showed an increase from 0.72 in 2021 to a peak of 0.94 in 2022, indicating a higher proportion of pre-tax earnings retained after taxes in that year. This ratio then declined back to 0.73 in 2023 and remained stable at 0.72 in 2024, suggesting a normalization of the tax impact on earnings post-2022.

Interest Burden

The interest burden ratio improved markedly from 0.67 in 2021 to 0.93 in 2022, reflecting a substantial reduction in interest expenses relative to earnings before interest and taxes that year. After 2022, the ratio declined to 0.87 in 2023 and further to 0.78 in 2024, indicating an upward trend in interest expenses or reduced operating profitability over the latter periods.

EBIT Margin

The EBIT margin experienced a significant turnaround from a large negative margin of -87.48% in 2020 to positive and improving margins thereafter. In 2021, the margin was 18.69%, nearly doubling to 41.35% in 2022, before declining to 26.1% in 2023 and further to 20.22% in 2024. This pattern suggests a recovery and strengthening in operating profitability until 2022, followed by a degree of margin contraction in the subsequent years.

Asset Turnover

Asset turnover increased from 0.22 in 2020 to 0.35 and then to 0.5 in 2021 and 2022, respectively, indicating improved efficiency in the use of assets to generate revenue. However, this ratio declined to 0.38 in 2023 and further to 0.31 in 2024, pointing to reduced asset utilization effectiveness in these most recent years.

Return on Assets (ROA)

The ROA mirrored the turnaround seen in EBIT margin, moving from a negative -18.52% in 2020 to a positive but modest 3.09% in 2021. It then surged to 18.32% in 2022, signifying a year of strong asset profitability. Subsequently, ROA decreased sharply to 6.35% in 2023 and decreased further to 3.58% in 2024, reflecting a diminishing return on invested assets despite remaining positive.

Tax Burden

The tax burden ratio shows some variability over the observed periods. It increased significantly from 0.72 in 2021 to a peak of 0.94 in 2022, indicating a higher proportion of earnings retained after tax at that point. This was followed by a decline back to around 0.72 in the subsequent years 2023 and 2024, suggesting a reversion to earlier levels of tax impact on earnings.

Interest Burden

The interest burden ratio improved notably from 0.67 in 2021 to 0.93 in 2022, reflecting a reduced interest expense relative to earnings before tax and interest. However, it declined thereafter, reaching 0.87 in 2023 and further dropping to 0.78 in 2024. Despite the peak in 2022, the later decrease indicates an increasing interest expense burden relative to operating earnings.

EBIT Margin

The EBIT margin demonstrates a significant recovery and growth trend over the period. It moved from a large negative value of -87.48% in 2020 to a positive 18.69% in 2021. It continued increasing sharply to its highest level of 41.35% in 2022. Subsequently, there was a decline in margin to 26.1% in 2023 and further down to 20.22% in 2024, though remaining positive and considerably better than the initial year.

Net Profit Margin

The net profit margin reflects a similar pattern to the EBIT margin. Starting with a negative figure of -83.28% in 2020, there was a substantial recovery to 8.95% in 2021, then a marked rise to 36.32% in 2022. Following this peak, the margin decreased to 16.62% in 2023 and further to 11.43% in 2024. The decline after 2022 suggests increasing costs or expenses impacting bottom-line profitability, but margins remain positive and improved compared to the initial period.