Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Income Statement
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2012
- Return on Assets (ROA) since 2012
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Profitability Ratios (Summary)
Phillips 66, profitability ratios
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
The financial data reveals several notable trends in profitability and returns over the period from 2015 to 2019.
- Gross Profit Margin
- The gross profit margin experienced fluctuations, starting at 7.58% in 2015 and declining to a low of 4.93% in 2016. Margins improved slightly in 2017 to 5.07% and continued to increase in 2018, reaching a peak of 7.76%. However, it decreased again in 2019 to 6.24%, indicating some volatility but generally maintaining a moderate level of gross profitability.
- Operating Profit Margin
- The operating profit margin mirrored the volatility seen in gross profit margins but at a lower magnitude. It showed a sharp drop from 4.47% in 2015 to 1.21% in 2016. Modest improvement occurred in 2017 to 1.69%, followed by substantial growth in 2018 to 4.63%. Nevertheless, it declined again to 2.21% in 2019, reflecting variability in operating efficiency and cost management over the years.
- Net Profit Margin
- Net profit margin demonstrated a more irregular pattern. Starting at 4.27% in 2015, it dropped significantly to 1.85% in 2016 but rebounded sharply in 2017 to 4.99%, remaining relatively stable at 5.02% in 2018. In 2019, the margin decreased to 2.87%, indicating fluctuations in overall profitability possibly due to changing expenses, taxes, or non-operating items.
- Return on Equity (ROE)
- The ROE showed marked volatility throughout the period. It declined steeply from a strong 18.3% in 2015 to 6.95% in 2016, then surged to 20.35% in 2017 and further increased to 22.7% in 2018. By 2019, it had decreased to 12.35%, signifying significant swings in the company’s ability to generate earnings from shareholders' equity, suggesting periods of both strong and weak financial performance.
- Return on Assets (ROA)
- The ROA trend followed a similar trajectory to ROE but with lower percentage values, indicating fluctuations in asset efficiency. Starting at 8.7% in 2015, it plunged to 3.01% in 2016, then rose to 9.39% in 2017 and 10.3% in 2018, before decreasing to 5.24% in 2019. The pattern suggests varying levels of effectiveness in asset utilization and operational performance over time.
In summary, the data evidences cyclical behavior in profit margins and returns over the five-year period, with 2016 representing a low point across most metrics followed by recovery peaks in 2017 and 2018, and subsequent declines in 2019. These patterns may reflect external market conditions, internal operational changes, or other financial dynamics affecting profitability and capital efficiency during this timeframe.
Return on Sales
Return on Investment
Gross Profit Margin
Phillips 66, gross profit margin calculation
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Sales and other operating revenues | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Gross profit margin = 100 × Gross profit ÷ Sales and other operating revenues
= 100 × ÷ =
The financial data over the five-year period demonstrates notable fluctuations in revenue and profitability metrics. The sales and other operating revenues experienced a decline from 2015 to 2016, decreasing from 98,975 million US dollars to 84,279 million US dollars. However, revenues rebounded strongly in 2017, reaching 102,354 million US dollars, and continued to rise in 2018, peaking at 111,461 million US dollars before a slight reduction to 107,293 million US dollars in 2019.
Gross profit followed a somewhat similar trend over the period. Starting at 7,502 million US dollars in 2015, it declined significantly in 2016 to 4,155 million US dollars. It then recovered moderately in 2017 to 5,192 million US dollars and increased substantially in 2018, reaching a peak of 8,651 million US dollars. In 2019, gross profit decreased again to 6,690 million US dollars.
Regarding the gross profit margin, which indicates the proportion of revenue remaining after the cost of goods sold, there was a clear downward shift in 2016 to 4.93% from 7.58% in 2015. The margin remained relatively stable in 2017 at 5.07%, then improved significantly in 2018 to 7.76%. This improvement suggests better cost control or pricing power during that year. However, the margin declined again in 2019 to 6.24%, indicating some erosion in profitability relative to sales.
Overall, the data reflect volatility in both revenue and profitability, with the best financial performance occurring in 2018. The fluctuations in gross profit margin suggest that external factors or internal operational changes may have affected cost efficiency and pricing strategies over these years.
Operating Profit Margin
Phillips 66, operating profit margin calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | ||||||
| Sales and other operating revenues | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Operating profit margin = 100 × Operating income ÷ Sales and other operating revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data exhibits considerable fluctuations in operating income over the five-year period. Initially, operating income stood at 4,429 million US dollars at the end of 2015 and then declined sharply to 1,016 million in 2016. Following this decline, it demonstrated a moderate recovery in 2017, reaching 1,725 million. A substantial increase occurred in 2018, with operating income peaking at 5,162 million, before decreasing again in 2019 to 2,375 million.
Revenue trends exhibit some variability but are less volatile compared to operating income. Sales and other operating revenues decreased from 98,975 million US dollars in 2015 to 84,279 million in 2016. This was followed by a consistent rise in the next two years, reaching 111,461 million in 2018, but then experienced a slight decline to 107,293 million in 2019.
Operating profit margin mirrors the fluctuations observed in operating income but remains relatively low overall. It started at 4.47% in 2015, dropped significantly to 1.21% in 2016, and then showed a modest increase to 1.69% in 2017. A notable improvement occurred in 2018, with the margin increasing to 4.63%, followed by a reduction to 2.21% in 2019.
- Operating Income
- Demonstrated a volatile pattern with a significant drop in 2016, moderate recovery through 2017, peak in 2018, and decline in 2019, indicating fluctuating profitability.
- Sales and Other Operating Revenues
- Exhibited a decline in 2016 followed by growth in 2017 and 2018, with a minor decrease in 2019, suggesting overall revenue resilience amid market variability.
- Operating Profit Margin
- Varied considerably, reaching its lowest in 2016 and highest in 2018, reflecting changes in cost control, pricing strategies, or market conditions affecting profitability.
In summary, the data indicates that while revenues have generally trended upward after 2016, operating income and profit margin have been more volatile, suggesting that cost management or external market factors significantly influenced profitability in these years.
Net Profit Margin
Phillips 66, net profit margin calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Phillips 66 | ||||||
| Sales and other operating revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Net profit margin = 100 × Net income attributable to Phillips 66 ÷ Sales and other operating revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Attributable to Phillips 66
- The net income exhibited considerable volatility over the observed period. Starting at 4,227 million US dollars in 2015, there was a significant decline to 1,555 million in 2016. This was followed by a sharp recovery in 2017, reaching 5,106 million, and a slight further increase in 2018 to 5,595 million. However, in 2019, net income declined again to 3,076 million. This pattern suggests fluctuations in profitability possibly driven by varying market conditions or operational factors.
- Sales and Other Operating Revenues
- Sales revenue generally trended upward from 2015 to 2019, starting at 98,975 million US dollars in 2015, dipping to 84,279 million in 2016, then rising progressively to 102,354 million in 2017, 111,461 million in 2018, and slightly decreasing to 107,293 million in 2019. The dip in 2016 could indicate a challenging market environment or other disruptions affecting sales volumes or pricing. The overall increasing trend suggests growth or expansion efforts post-2016.
- Net Profit Margin
- The net profit margin reflects profitability relative to sales and also displayed marked fluctuations. It decreased to 1.85% in 2016 from 4.27% in 2015, echoing the drop in net income and revenues that year. There was considerable improvement in 2017 and 2018, reaching nearly 5%, indicating higher efficiency or better cost management. In 2019, the margin narrowed to 2.87%, consistent with the decline in net income and sales. The margin trend underscores sensitivity to both revenue fluctuations and cost factors impacting profitability.
Return on Equity (ROE)
Phillips 66, ROE calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Phillips 66 | ||||||
| Stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
ROE = 100 × Net income attributable to Phillips 66 ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reflects varying trends in net income, stockholders’ equity, and return on equity (ROE) over the five-year period from 2015 to 2019.
- Net Income Attributable to Phillips 66
- Net income demonstrates considerable volatility during the period. It starts at a high level in 2015 with 4,227 million US dollars, then declines sharply to 1,555 million in 2016. Subsequently, it rebounds strongly to 5,106 million in 2017 and slightly increases further to 5,595 million in 2018, before dropping again to 3,076 million in 2019. This indicates periods of strong profitability interrupted by fluctuations, evidencing possibly varying operational or market conditions affecting earnings.
- Stockholders’ Equity
- Stockholders’ equity remains relatively stable with a slight overall growth trend. It starts at 23,100 million US dollars in 2015, experiences a minor decrease to 22,390 million in 2016, then increases steadily to 25,085 million in 2017, dips slightly to 24,653 million in 2018, and rises marginally to 24,910 million in 2019. This suggests a generally stable capital base with moderate changes possibly influenced by retained earnings and dividends.
- Return on Equity (ROE)
- ROE follows a pattern that broadly correlates with net income fluctuations. It begins at 18.3% in 2015, falls markedly to 6.95% in 2016, recovers sharply to 20.35% in 2017, peaks at 22.7% in 2018, and then declines to 12.35% in 2019. These movements indicate the company’s efficiency in generating profit from equity varies substantially over the years, aligning with the changes seen in net income.
Overall, the data points to a financial performance characterized by significant earnings variability, a stable yet slightly fluctuating equity base, and correspondingly volatile returns on equity. This suggests periods of robust profitability interspersed with downturns, reflecting a business environment influenced by changing economic or industry-specific factors.
Return on Assets (ROA)
Phillips 66, ROA calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Phillips 66 | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
ROA = 100 × Net income attributable to Phillips 66 ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals notable fluctuations in the company's net income attributable over the five-year period. Initially, net income was relatively high at 4,227 million US dollars in 2015, followed by a significant decrease to 1,555 million US dollars in 2016. This was succeeded by a sharp increase to 5,106 million and 5,595 million US dollars in 2017 and 2018, respectively. The figure then declined substantially to 3,076 million US dollars in 2019.
Total assets exhibited a steady upward trend throughout the period under review. Starting at 48,580 million US dollars in 2015, total assets increased consistently each year, reaching 58,720 million US dollars by 2019. This represents a gradual accumulation of assets over the five-year span.
Return on assets (ROA) demonstrated a pattern broadly similar to net income, with considerable variation. After recording 8.7% in 2015, ROA decreased sharply to 3.01% in 2016. It then rebounded to 9.39% in 2017 and further increased to 10.3% in 2018. In 2019, ROA fell again to 5.24%. This oscillation reflects changes in profitability relative to the asset base over the years examined.
- Net Income Attributable
- Experienced volatility with a marked dip in 2016, a strong recovery in 2017-2018, and a decline in 2019.
- Total Assets
- Displayed consistent growth over the entire period, indicating ongoing asset accumulation.
- Return on Assets (ROA)
- Followed a fluctuating trend paralleling net income, showing decreased efficiency in 2016 and 2019 but stronger performance in the intervening years.
Overall, the data suggest variability in profitability over the five years with a generally expanding asset base. The fluctuations in ROA and net income highlight periods of both strong and weaker financial performance, while total assets' steady increase underscores investment or acquisition activities supporting business growth.