Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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Pioneer Natural Resources Co. pages available for free this week:
- Statement of Comprehensive Income
- Cash Flow Statement
- Analysis of Long-term (Investment) Activity Ratios
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Current Ratio since 2005
- Total Asset Turnover since 2005
- Price to Sales (P/S) since 2005
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Economic Profit
Pioneer Natural Resources Co., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The analysis of economic value creation reveals a period of significant volatility and a general struggle to consistently exceed the cost of capital. Economic profit remained negative for the majority of the observed period, with only a single year of positive value creation, indicating that the returns on invested capital frequently fell below the required threshold.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited extreme fluctuations between 2019 and 2023. A sharp decline occurred in 2020, where profits turned negative, followed by a recovery in 2021 and a substantial peak in 2022, reaching 9,759 million US$. However, this momentum decelerated in 2023, with NOPAT decreasing to 5,533 million US$, reflecting the cyclical nature of the operational environment.
- Invested Capital and Cost of Capital
- A significant expansion of the capital base is observed between 2020 and 2021, where invested capital increased from 17,004 million US$ to 32,653 million US$, nearly doubling in size. This elevated capital base remained relatively stable through 2023. Concurrently, the cost of capital remained remarkably consistent, fluctuating within a narrow range between 18.65% and 19.49%, which imposed a high financial hurdle for achieving positive economic profit.
- Economic Profit Performance
- The economic profit trend underscores the difficulty of generating returns that surpass the high cost of capital on an expanded asset base. Negative economic profits were recorded from 2019 through 2021, with the deepest deficit occurring in 2020. The company achieved a positive economic profit of 3,626 million US$ in 2022, driven by the surge in NOPAT. This trend reversed in 2023, as the decline in operating profit, paired with a slightly increasing cost of capital and a larger invested capital base, resulted in a return to a negative economic profit of -963 million US$.
Net Operating Profit after Taxes (NOPAT)
Pioneer Natural Resources Co., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in employee-related obligations.
3 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to common stockholders.
4 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income (loss) attributable to common stockholders.
- Net Income (Loss) Attributable to Common Stockholders
- The net income experienced significant volatility over the analyzed periods. In 2019, the company reported a positive net income of 756 million US dollars. However, in 2020, there was a notable decline resulting in a net loss of 200 million US dollars, indicating a challenging year likely impacted by adverse conditions. The financial position improved markedly in 2021 with net income rising sharply to 2,118 million US dollars. This upward trend intensified dramatically in 2022, reaching a peak of 7,845 million US dollars, reflecting a period of strong profitability. In 2023, net income decreased substantially to 4,894 million US dollars but remained significantly higher than the levels seen prior to 2021, indicating sustained profitability despite some contraction.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT mirrored the trends observed in net income, exhibiting considerable fluctuations across the years. Initially, in 2019, NOPAT was positive at 1,075 million US dollars before declining sharply to a negative 149 million US dollars in 2020, suggesting operational challenges that year. An impressive rebound occurred in 2021, with NOPAT increasing to 2,831 million US dollars, more than offsetting the previous year's loss. The peak was achieved in 2022 with a substantial increase in operational profitability to 9,759 million US dollars. In 2023, NOPAT decreased to 5,533 million US dollars but remained well above the pre-2021 levels, indicating that operational efficiency and profitability remained robust.
- Overall Trends and Insights
- Both net income and NOPAT demonstrate a notable turnaround starting in 2021 after significant setbacks in 2020. The year 2020 represents a clear outlier characterized by a steep decline, likely due to extraordinary factors impacting performance. Following this, the company recovered strongly, reaching record high levels in 2022 for both profitability metrics, before experiencing a retrenchment in 2023. The persistence of positive and elevated profitability figures post-2020 suggests improved operational effectiveness and market conditions, despite some volatility. The gap between net income and NOPAT across the years indicates the influence of factors beyond core operations affecting bottom-line results. The data suggests a resilient financial performance trajectory after overcoming a period of adversity.
Cash Operating Taxes
Pioneer Natural Resources Co., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- Income Tax Provision (Benefit)
- The income tax provision exhibits significant volatility over the analyzed periods. It declined from 231 million USD in 2019 to a benefit of 61 million USD in 2020, indicating a reversal or reduction in tax obligations during that year. Subsequently, it surged to 628 million USD in 2021, followed by a sharp increase to 2,106 million USD in 2022. In 2023, the provision decreased to 1,353 million USD, remaining substantially higher than the levels observed in 2019 and 2021. This pattern suggests fluctuating taxable income or changes in tax regulations impacting the company's tax expenses.
- Cash Operating Taxes
- Cash operating taxes have shown a consistent upward trend throughout the periods analyzed. Beginning at 23 million USD in 2019, the amount slightly decreased to 19 million USD in 2020 but then increased markedly to 80 million USD in 2021. The upward trend accelerated in subsequent years, reaching 328 million USD in 2022 and further rising to 882 million USD in 2023. This steady growth indicates increasing cash tax outflows related to operating activities, possibly reflecting higher taxable income or changes in operational structure or tax policy.
Invested Capital
Pioneer Natural Resources Co., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of employee-related obligations.
4 Addition of equity equivalents to equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of short-term investment.
- Total Reported Debt & Leases
- The total reported debt and leases exhibit considerable variability across the five-year period. Starting at 3,167 million US dollars in 2019, the debt increased to 4,066 million in 2020. A significant surge is observed in 2021, with the debt nearly doubling to 7,835 million. However, the subsequent years show a decline, dropping to 5,786 million in 2022 and remaining relatively stable at 5,760 million in 2023. This pattern suggests a peak in borrowing or leasing obligations in 2021 followed by deleveraging efforts or repayment in the following years.
- Equity
- Equity values show a generally positive trajectory over the period analyzed. Beginning at 12,119 million US dollars in 2019, equity slightly declined to 11,569 million in 2020. Post-2020, there is a dramatic increase in equity to 22,837 million in 2021, maintaining a stable level around 22,541 million in 2022 before rising modestly to 23,171 million in 2023. The substantial equity growth in 2021 may indicate a significant capital infusion, improved retained earnings, or revaluation of assets.
- Invested Capital
- Invested capital follows a trend closely aligned with equity and total debt movements. Starting at 16,681 million US dollars in 2019, it shows a mild increase to 17,004 million in 2020. A large increase occurs in 2021, where invested capital nearly doubles to 32,653 million. The invested capital slightly decreases to 32,194 million in 2022 but then increases again to 33,333 million in 2023. This coincides with the variations in debt and equity, implying changes in the company's financing and asset base.
Cost of Capital
Pioneer Natural Resources Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and finance lease liability, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liability, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and finance lease liability, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liability, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and finance lease liability, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liability, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and finance lease liability, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liability, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and finance lease liability, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liability, including current portion. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Pioneer Natural Resources Co., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The analysis of economic value added between 2019 and 2023 reveals a period of significant volatility, characterized by a struggle to consistently generate returns above the cost of capital. The company experienced sustained negative economic profit for three of the five years analyzed, with a singular peak of value creation occurring in 2022.
- Economic Spread Ratio
- A highly fluctuating trend is observed in the economic spread ratio. The ratio declined from -12.71% in 2019 to a trough of -19.75% in 2020, indicating a widening gap where the return on invested capital fell significantly below the weighted average cost of capital. A recovery phase followed, with the ratio improving to -9.97% in 2021 and reaching a positive peak of 11.26% in 2022. However, this momentum was not sustained, as the ratio reverted to a negative -2.89% by the end of 2023.
- Invested Capital
- The capital base remained relatively stable between 2019 and 2020, hovering around 16.7 billion to 17.0 billion US dollars. A substantial expansion occurred in 2021, where invested capital nearly doubled to 32.65 billion US dollars. This elevated level of investment was maintained through 2022 and 2023, ending the period at 33.33 billion US dollars, suggesting a significant increase in the company's asset base or financing requirements during the 2021 fiscal year.
- Economic Profit
- Economic profit mirrored the volatility of the spread ratio. Absolute losses deepened in 2020 to -3.36 billion US dollars and remained severe in 2021 at -3.26 billion US dollars. A sharp pivot occurred in 2022, with the company achieving a positive economic profit of 3.63 billion US dollars, marking the only period of genuine economic value creation. By 2023, the figure returned to a negative position of -963 million US dollars, although this loss is markedly less severe than those recorded during the 2019-2021 period.
Overall, the data indicates that while the company successfully transitioned to a positive economic spread in 2022, it has struggled to maintain a return that exceeds its cost of capital over the long term. The massive increase in invested capital starting in 2021 did not lead to a permanent shift toward positive economic profit, as evidenced by the negative spread observed in 2023.
Economic Profit Margin
Pioneer Natural Resources Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenue from contracts with purchasers | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue from contracts with purchasers
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial performance between 2019 and 2023 is characterized by significant volatility in economic value generation, with a predominantly negative trend interrupted by a singular year of positive economic profit.
- Economic Profit Performance
- Economic profit exhibited substantial fluctuations, starting at -2,119 million USD in 2019 and deepening to a five-year low of -3,358 million USD in 2020. A sharp recovery occurred in 2022, where the figure swung to a positive 3,626 million USD. This gain was temporary, as the value returned to a negative 963 million USD in 2023.
- Revenue Trajectory
- Revenue experienced a decline from 9,671 million USD in 2019 to 7,024 million USD in 2020, followed by a period of rapid growth. Revenue peaked in 2022 at 24,384 million USD, marking a significant increase from the 2020 trough. A contraction followed in 2023, with revenue decreasing to 19,374 million USD.
- Economic Profit Margin Analysis
- The economic profit margin closely tracked the trends in absolute economic profit and revenue. The margin reached its lowest point in 2020 at -47.80%, indicating a severe failure to cover the cost of capital relative to revenue. This was followed by a steady climb to a peak of 14.87% in 2022. By 2023, the margin declined again to -4.97%, suggesting that while the loss was less severe than in previous years, the entity remained unable to create economic value at the end of the period.