Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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Pioneer Natural Resources Co. pages available for free this week:
- Statement of Comprehensive Income
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Current Ratio since 2005
- Price to Sales (P/S) since 2005
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Return on Invested Capital (ROIC)
Pioneer Natural Resources Co., ROIC 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum 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 NOPAT. See details »
2 Invested capital. See details »
3 2023 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes exhibited significant volatility over the observed periods. It decreased from a positive value of 1075 million US dollars in 2019 to a negative figure of -149 million in 2020, indicating a substantial decline in profitability during that year. Following this downturn, there was a substantial recovery and growth, with NOPAT rising sharply to 2831 million in 2021 and then experiencing a very strong increase to 9759 million in 2022. However, in 2023, NOPAT declined to 5533 million, demonstrating a notable reduction from the previous year but remaining well above the initial levels in 2019 and 2021.
- Invested Capital
- The invested capital increased steadily over the five-year period. Starting from 16681 million in 2019, the value rose slightly to 17004 million in 2020. There was a marked increase in 2021, as invested capital nearly doubled to 32653 million. This level remained relatively stable in 2022 at 32194 million, with a slight incremental rise to 33333 million in 2023. The overall trend indicates continual growth in the capital base employed by the company during these years.
- Return on Invested Capital (ROIC)
- The return on invested capital mirrored the fluctuations seen in profitability. ROIC was 6.44% in 2019 before declining to a negative -0.88% in 2020, reflecting the negative NOPAT of that year. It rebounded strongly in 2021 to 8.67%, suggesting improved efficiency and profitability in utilizing invested capital. The ROIC peaked significantly to 30.31% in 2022, corresponding with the surge in net operating profit. In 2023, ROIC decreased to 16.6%, which, while substantially lower than the previous year's peak, still represents a robust return relative to earlier years.
- Summary
- The data reveal considerable variability in profitability, with a downturn in 2020 likely due to adverse conditions followed by a recovery and accelerated growth peaking in 2022. Invested capital consistently increased, particularly between 2020 and 2021, supporting expanded operations. ROIC changes closely track the fluctuations in net operating profit, indicating that operational efficiency and profitability per invested dollar improved markedly after 2020, reaching exceptional levels in 2022 before moderating in 2023. Overall, the trends suggest a period of recovery and enhanced profitability following an initial decline, accompanied by strategic capital deployment.
Decomposition of ROIC
Pioneer Natural Resources Co., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × |
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 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
- Operating Profit Margin (OPM)
- The operating profit margin exhibits notable fluctuations over the analyzed periods. It began at 11.34% in 2019, declined sharply to -1.85% in 2020 indicating an operational loss, then rebounded strongly to 16.29% in 2021. The margin saw a substantial increase to 41.37% in 2022, followed by a decline to 33.11% in 2023. This pattern suggests a recovery and significant profitability improvement after 2020, with a peak in 2022 and a slight reduction thereafter.
- Turnover of Capital (TO)
- The turnover of capital ratio demonstrates moderate variability. It started at 0.58 in 2019, decreased to 0.41 in 2020, indicating less efficiency in generating revenue from capital employed. It improved to 0.55 in 2021, increased further to a peak of 0.76 in 2022, and then declined back to 0.58 in 2023. This trend implies a recovery in asset utilization efficiency after 2020, peaking in 2022, with a slight reversion to earlier levels afterwards.
- 1 – Effective Cash Tax Rate (CTR)
- The effective cash tax rate, expressed as 1 minus CTR, remains consistently high across all periods, ranging between 86.25% and 100%. It was at 97.95% in 2019, peaked at 100% in 2020, and slightly declined over subsequent years to 86.25% in 2023. This indicates that the company has maintained a relatively low cash tax burden throughout the periods, with a slight increase in cash taxes paid in the most recent year.
- Return on Invested Capital (ROIC)
- Return on invested capital follows a pattern similar to the operating profit margin. It was modestly positive at 6.44% in 2019, dropped to a negative -0.88% in 2020, which reflects operational difficulties or losses. Subsequently, the ROIC improved significantly to 8.67% in 2021, surged to a high of 30.31% in 2022, and then decreased to 16.6% in 2023. This trend indicates strong recovery and value generation from invested capital after the downturn in 2020, with the highest capital efficiency achieved in 2022 and a partial decline thereafter.
Operating Profit Margin (OPM)
Pioneer Natural Resources Co., OPM 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Revenue from contracts with purchasers | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum 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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
OPM = 100 × NOPBT ÷ Revenue from contracts with purchasers
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes shows a fluctuating yet overall upward trend over the observed periods. In 2019, the profit was positive at 1097 million USD but experienced a significant decline to a negative value of -130 million USD in 2020. This indicates a challenging year likely marked by operational difficulties or external factors adversely affecting profitability. The company then demonstrated a strong recovery, with NOPBT rising to 2912 million USD in 2021, followed by a substantial increase to 10087 million USD in 2022. A decline is observed in 2023, with profit falling to 6415 million USD, though it remains significantly higher than the figures prior to 2022.
- Revenue from Contracts with Purchasers
- The revenue trend reveals an initial decrease from 9671 million USD in 2019 to 7024 million USD in 2020, mirroring the decline in profitability during the same period. Subsequently, revenue increased sharply to 17870 million USD in 2021, representing a more than twofold increase from 2020, followed by continued growth to 24384 million USD in 2022. In 2023, revenue declined to 19374 million USD but remained well above the levels observed in 2019 and 2020, indicating an overall growth trajectory despite the recent reduction.
- Operating Profit Margin (OPM)
- The operating profit margin data aligns closely with the trends in net operating profit. The margin was positive at 11.34% in 2019 but turned negative at -1.85% in 2020, signifying operational losses during that year. Thereafter, OPM rebounded significantly to 16.29% in 2021 and surged to a peak of 41.37% in 2022, demonstrating a period of highly efficient operations or favorable market conditions. In 2023, the margin decreased to 33.11%, indicating a reduction in profitability relative to revenue but remaining at a relatively strong level compared to earlier years.
- Summary of Trends
- Overall, the data illustrates a period of volatility in 2020 followed by strong recovery and growth through 2021 and 2022. Both profitability and revenue expanded substantially during this recovery phase, with operating efficiency reaching its highest levels in 2022. The slight declines observed in 2023 in both revenue and profitability metrics suggest emerging challenges or market fluctuations but do not negate the significant gains achieved in the preceding years.
Turnover of Capital (TO)
Pioneer Natural Resources Co., TO 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) | ||||||
| Revenue from contracts with purchasers | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum 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 Invested capital. See details »
2 2023 Calculation
TO = Revenue from contracts with purchasers ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Revenue from contracts with purchasers
- The revenue exhibited significant fluctuations over the observed periods. It started at 9,671 million US dollars in 2019, decreased notably to 7,024 million in 2020, followed by a strong recovery and surge to 17,870 million in 2021. The upward trend continued into 2022, reaching a peak of 24,384 million, before declining to 19,374 million in 2023. This pattern indicates considerable volatility with an overall increasing trajectory until 2023.
- Invested capital
- The invested capital showed a generally increasing trend throughout the years. Beginning at 16,681 million US dollars in 2019, it increased modestly to 17,004 million in 2020, then rose sharply to 32,653 million in 2021. The figure stabilized somewhat with a slight decline to 32,194 million in 2022, followed by a moderate increase to 33,333 million in 2023. This trend suggests ongoing capital investment with a focus on expansion or asset base growth, especially from 2020 onwards.
- Turnover of capital (TO)
- The turnover of capital ratio demonstrated notable variability. It started at 0.58 in 2019, dropped to a low of 0.41 in 2020, then increased to 0.55 in 2021. The ratio peaked at 0.76 in 2022, indicating improved efficiency in utilizing invested capital to generate revenue during that year. However, it reduced again to 0.58 in 2023, returning to its initial level from 2019. This fluctuation reflects changes in operational efficiency and possibly shifts in asset utilization or revenue generation effectiveness.
Effective Cash Tax Rate (CTR)
Pioneer Natural Resources Co., CTR 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum 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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- There is a significant upward trend in cash operating taxes over the analyzed periods. The amount rose steadily from $23 million in 2019 to $882 million in 2023, with particularly sharp increases between 2021 and 2023. The increase in cash taxes paid suggests growing taxable income or changes in tax liabilities.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibited considerable volatility. In 2019, the company reported a positive profit of $1,097 million, followed by a loss of $130 million in 2020. Subsequently, there was a strong recovery with profits increasing sharply to $2,912 million in 2021, peaking at $10,087 million in 2022, before declining to $6,415 million in 2023. This fluctuation indicates variability in operational performance, possibly due to market conditions, operational efficiency, or commodity prices.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate shows an increasing pattern, although some data points are missing. It started at 2.05% in 2019, was unreported in 2020, increased slightly to 2.75% in 2021, then climbed to 3.25% in 2022, and rose substantially to 13.75% in 2023. This sharp rise in the tax rate in 2023 suggests changes in tax policy, greater profitability leading to higher tax brackets, or adjustments in tax planning strategies.