Occidental Petroleum Corp. (NYSE:OXY)

The analysis of the quarterly financial metrics reveals notable trends in key performance indicators over the observed periods. The three primary financial ratios under review are Return on Assets (ROA), Financial Leverage, and Return on Equity (ROE).

Return on Assets (ROA)

The ROA showed a significant improvement from negative values in early 2021, starting at -16.34% in the first quarter of 2021 and increasing steadily to positive territory by the end of 2021, reaching 18.32% in the fourth quarter. This progression indicates increasing efficiency in asset utilization to generate profits during this period.

From 2022 onwards, ROA peaked in the third quarter of 2022 at 17.9% and then exhibited a gradual declining trend through 2023 and into 2025, where it settled around 2.84% by the first quarter of 2025. This decline suggests a reduction in asset profitability or possibly increased asset base without proportional profit increases.

Financial Leverage

Financial leverage demonstrated a decreasing trend from 4.34 in the first quarter of 2021 to 2.41 by the last quarter of 2022. This reduction implies a deleveraging process, reflecting lower reliance on debt or liabilities relative to equity.

Post 2022, the financial leverage ratio stabilized, fluctuating mildly around 2.4 to 2.5 through to mid-2025, indicating that the company maintained a consistent capital structure with moderate leverage after the initial deleveraging phase.

Return on Equity (ROE)

ROE showed dramatic improvement beginning from a deeply negative value of -70.84% in the first quarter of 2021 to a peak exceeding 44% during the third quarter of 2022. This sharp increase highlights a substantial enhancement in the company’s ability to generate profit from shareholders' equity during this interval.

Following the peak, ROE exhibited a decline comparable to ROA’s pattern, decreasing gradually to about 6.72% by the first quarter of 2025. This trend suggests reduced efficiency in producing equity returns over time, although still remaining positive and above initial negative levels.

In summary, the company’s financial performance improved significantly through 2021 into 2022, marked by higher returns on assets and equity alongside decreased financial leverage. However, the subsequent periods reflect a tapering in profitability and a stabilization of leverage ratios. The data suggest a transition from rapid recovery and growth toward a more moderate and stable financial profile, with less aggressive leverage and gradually declining returns on assets and equity.

Net Profit Margin

The net profit margin shows a significant recovery from a highly negative value of -78.62% in early 2021, improving steadily to positive territory by the end of the same year. It peaked around the last quarter of 2022 at approximately 36.32%. Thereafter, a gradual decline occurred through 2023 and into 2025, settling near 8.84% by mid-2025. This pattern indicates initial operational challenges followed by a strong profitability phase, and a subsequent moderation in profit margins.

Asset Turnover

The asset turnover ratio exhibits a generally increasing trend from 0.21 in the first quarter of 2021, reaching a plateau around 0.50 by the end of 2021 through early 2023. From mid-2023, the ratio gradually declines to approximately 0.32 by mid-2025. This suggests an improvement in how efficiently the company utilized its assets during 2021 and early 2022, followed by a reduction in asset efficiency in subsequent periods.

Financial Leverage

Financial leverage decreased steadily from 4.34 at the start of 2021 to about 2.41 in late 2022, indicating a reduction in debt dependency. From late 2022 through mid-2025, the leverage ratio stabilizes in the range of 2.3 to 2.5, pointing to a more conservative and stable capital structure during this period.

Return on Equity (ROE)

Return on equity reflects a recovery pattern similar to net profit margin, starting from a deeply negative level of -70.84% in Q1 2021 and significantly improving to a peak near 45% by late 2022. Thereafter, ROE declines steadily to approximately 6.72% by mid-2025. The initial negative values suggest substantial losses or write-downs, followed by a strong period of enhancing shareholder value, and then a tapering of returns in recent periods.

Tax Burden

The tax burden ratio shows a fluctuating pattern from early 2022 onward. It initially increased sharply to a peak above 1 in mid-2022, indicating periods of tax benefits or credits exceeding taxable income. Subsequently, it stabilizes around 0.7 to 0.75 in 2023 and moving into 2024, with a slight gradual decline towards 0.69 by mid-2025. This indicates a moderate and fairly consistent tax impact on pre-tax income over the latter periods.

Interest Burden

The interest burden ratio starts with a notably negative value in the third quarter of 2021, reflecting a period with either negative operating earnings or an unusual event affecting interest calculations. From late 2021, it improved significantly, stabilizing near 0.9 throughout 2022 and maintaining a gradual decrease to about 0.74 by mid-2025. This trend suggests improving operational efficiency in managing interest expenses but also a slight increase in interest impact in recent quarters.

EBIT Margin

The EBIT margin demonstrates a strong recovery from severe negative profitability in early 2021 (-82.65%) to positive territory by late 2021 (18.69%), followed by impressive growth peaking at over 41% in late 2022. However, from 2023 onwards, there is a consistent and steady decline in EBIT margin, falling to approximately 17.29% by mid-2025. This pattern reflects a recovering and then contracting profitability at the operating level, indicating growing cost pressures or declining revenue quality in the recent periods.

Asset Turnover

Asset turnover shows an upward trend from 0.21 in early 2021 to a peak of about 0.5 by the end of 2022, suggesting enhanced efficiency in using assets to generate sales during this period. After hitting the peak, asset turnover gradually declines to 0.32 by mid-2025, indicating a reduction in sales generated per unit of assets or an increase in asset base without proportional revenue growth in recent quarters.

Financial Leverage

Financial leverage decreases significantly from over 4.3 in early 2021 to around 2.4 by the end of 2022, pointing to a deleveraging strategy or balance sheet strengthening efforts. This more conservative leverage level remains relatively stable with minor fluctuations through the subsequent periods, ending close to 2.36 by mid-2025, suggesting a maintained focus on moderate leverage.

Return on Equity (ROE)

The ROE transitions from deeply negative levels in 2021 (-70.84% to -1.73%) to substantial positive returns by late 2021 and throughout 2022, peaking at nearly 45%. However, from 2023 forward, a clear downward trend is observed, with ROE falling steadily to approximately 6.72% by mid-2025. This trajectory mirrors the EBIT margin trend and indicates decreasing profitability and shareholder returns, potentially impacted by diminishing operational margins and asset efficiency.

Net Profit Margin

The net profit margin exhibits a notable improvement from a substantial negative value of -78.62% in the first quarter of 2021 to positive territory by the end of 2021, peaking at 36.32% in the fourth quarter of 2021. Following this peak, margins remain robust throughout 2022 but start a gradual decline commencing in 2023. The downward trend continues into 2024 and early 2025, where the margin decreases to 8.84% by mid-2025. This pattern indicates a recovery phase followed by a period of stabilization and gradual compression of profitability.

Asset Turnover

Asset turnover shows a consistent growth from 0.21 at the start of 2021 to a high of 0.5 by the end of 2021 and maintaining this level into early 2023. Post this peak phase, asset turnover demonstrates a steady decline, falling to around 0.32 by mid-2025. This suggests an initial improvement in operational efficiency or asset utilization, with subsequent diminishing efficiency or increased asset base not translating proportionally into sales.

Return on Assets (ROA)

ROA trends mirror the general pattern of net profit margin, starting from a negative -16.34% in early 2021 and improving steadily to reach a peak of 18.32% in the final quarter of 2021. Thereafter, ROA experiences a clear downward trajectory through 2023 and 2024, tapering off to approximately 2.84% by mid-2025. This progression points to an initial phase of asset profitability recovery, followed by a period of diminishing returns on asset investment.

Overall Financial Trends

Collectively, the data reflects a significant turnaround from negative profitability and asset returns in early 2021 to a strong performance closing that year, with both profit margins and ROA reaching peaks. However, from 2022 onwards, all three key ratios indicate a gradual decline, suggesting that while operational efficiency and profitability improved significantly during 2021, sustaining these levels remains challenging. The declining trends after the peak could result from factors such as increased costs, competitive pressures, or changes in asset utilization efficiency.

Tax Burden

The tax burden ratio shows a fluctuating trend from 2021 through 2025. It starts at 0.72 in March 2022, peaks at 1.14 in June 2022, and then stabilizes in the range of approximately 0.69 to 0.75 from March 2023 to June 2025. This indicates some variability in the effective tax impact on earnings, with a general trend toward stabilization in later periods.

Interest Burden

The interest burden exhibits a significant improvement starting from a negative value of -0.11 in September 2021 to positive values in subsequent periods. It peaks at 0.93 during December 2022 and early 2023, then gradually declines to 0.74 by June 2025. Overall, this suggests improved operating efficiency and reduced interest expense impact over time, though there is a mild decline in the final periods.

EBIT Margin

The EBIT margin demonstrates a strong upward trajectory from a deeply negative margin of -82.65% in March 2021 to a peak of 41.35% in December 2021. Following this peak, the margin declines gradually but remains positive, settling around 17.29% by March 2025. The initial recovery marks a significant operational turnaround, followed by a tapering indicating possible margin pressure or normalization in later periods.

Asset Turnover

Asset turnover improves steadily from 0.21 in March 2021 up to 0.50 in December 2021, maintaining that level into early 2023. After that, there is a gradual decline to around 0.32 by mid-2025. This trend reflects an initial increase in asset utilization efficiency followed by a reduction, possibly indicating changes in asset base or sales volume over time.

Return on Assets (ROA)

ROA follows a marked improvement from a negative 16.34% in March 2021 to a positive 18.32% by December 2021. After this peak, ROA declines consistently to approximately 2.84% by June 2025. This pattern signals an initial recovery in asset profitability succeeded by a steady drop in efficiency or profitability of the asset base over the subsequent years.

Tax Burden

The tax burden ratio appears to have limited data at the beginning, starting from March 31, 2022. It initially spikes above 1.0 in the second quarter of 2022, suggesting unusually high tax expense relative to pre-tax income during that period. Following this spike, the ratio stabilizes around 0.7 to 0.75 for most subsequent quarters, indicating a more consistent tax impact on earnings. A gradual decline is observed towards the last reported quarters, reaching 0.69 by June 30, 2025, which could imply a reduction in tax expenses or changes in tax policies or structures.

Interest Burden

The interest burden ratio shows significant volatility and improvement over time. Initially, a negative value is recorded in September 30, 2021, signaling possible negative operating income or high interest costs impacting earnings. From the end of 2021 through mid-2023, this ratio improves steadily from 0.67 to around 0.93, reflecting a decreasing relative interest expense or improved earnings before interest and taxes. However, a declining trend is evident in the most recent quarters, dropping to 0.74 by June 30, 2025, suggesting either increased interest expenses or pressure on operating earnings.

EBIT Margin

The EBIT margin demonstrates a pronounced recovery and growth trend from early 2021 into late 2022. Starting from highly negative territory (-82.65%) in March 2021, the margin shifts to positive and strengthens progressively, peaking around 41.35% by December 31, 2022. Post-peak, the margin experiences a gradual decline through mid-2025, moving down to 17.29%. This pattern implies a significant improvement in operating profitability over two years, followed by a moderate contraction possibly due to market, cost, or operational pressures.

Net Profit Margin

Similarly, the net profit margin reflects a robust recovery from substantial losses in early 2021 (-78.62%) to positive territory by the end of 2021. It further improves to a peak of approximately 36.32% by December 31, 2022, slightly lagging behind EBIT margin trends. Thereafter, a declining pattern emerges, with the margin dropping to 8.84% by June 30, 2025. This decline indicates reduced profitability at the net income level, possibly attributable to higher expenses, interest costs, or taxation, aligning with the trends seen in the tax and interest burden ratios.