Texas Pacific Land Corp. (NYSE:TPL)

Return on Assets (ROA)

The Return on Assets exhibited significant variability over the analyzed period. Initially, in 2019, ROA was notably high at 53.28%, followed by a marked decline to 30.8% in 2020. Subsequently, there was a moderate recovery in 2021 to 35.33%, a pronounced increase in 2022 reaching 50.87%, and a decrease again in 2023 to 35.08%. This pattern suggests fluctuating efficiency in asset utilization, with peaks in 2019 and 2022 and troughs in 2020 and 2023.

Financial Leverage

Financial Leverage showed a gradual decreasing trend over the five-year period. Starting at 1.17 in 2019, it remained relatively stable in 2020 and 2021 at 1.18 and 1.17 respectively, then declined more noticeably to 1.14 in 2022 and 1.11 in 2023. This declining leverage implies a cautious approach to debt or borrowing, indicating a possible reduction in financial risk or a preference for equity financing over time.

Return on Equity (ROE)

Return on Equity followed a similar fluctuating pattern as ROA but remained consistently higher in percentage terms. The ROE started very strong at 62.23% in 2019, then declined sharply to 36.28% in 2020. It showed a gradual recovery in 2021 to 41.43%, a significant rise in 2022 to 57.75%, and then a decline again in 2023 to 38.88%. These movements indicate volatility in generating net income from equity but generally reflect a higher profitability level relative to assets, modulated by changes in leverage and operational performance.

The financial ratios over the five-year period reveal several notable trends in the company's performance and efficiency.

Net Profit Margin

The net profit margin experienced moderate fluctuations, starting at a high level of 64.98% in 2019. It declined to 58.19% in 2020, indicating decreased profitability that year, possibly due to external or internal factors impacting costs or revenues. In 2021, the margin improved slightly to 59.87%, followed by a significant increase to 66.88% in 2022, the highest level in the observed period, reflecting enhanced profitability or cost management. However, in 2023, the margin decreased somewhat to 64.23%, slightly below the 2019 starting point but still maintaining a robust profit margin overall.

Asset Turnover

Asset turnover ratios indicate how efficiently the company uses its assets to generate sales. There was a notable decline from 0.82 in 2019 to 0.53 in 2020, suggesting a significant drop in asset utilization efficiency. A modest recovery occurred in 2021 with a ratio of 0.59, followed by a further increase to 0.76 in 2022, indicating improved operational efficiency. Despite this rebound, the ratio fell again to 0.55 in 2023, signaling challenges in maintaining consistent asset productivity.

Financial Leverage

Financial leverage remained relatively stable throughout the period, with a gradual decline from 1.17 in 2019 to 1.11 by 2023. This suggests a conservative approach to using debt relative to equity, with a slight reduction in leverage over time, potentially indicating efforts to strengthen the equity base or reduce financial risk.

Return on Equity (ROE)

ROE exhibited considerable volatility across the years. Starting at a very high 62.23% in 2019, it dropped sharply to 36.28% in 2020. The following year saw a partial recovery to 41.43%, and a strong upward movement to 57.75% in 2022, demonstrating improved profitability in relation to shareholder equity. However, the ROE declined again to 38.88% in 2023. These fluctuations mirror the patterns observed in net profit margin and asset turnover, underscoring the impact of profitability and asset utilization on shareholder returns.

In summary, the company demonstrated strong profitability margins with some variability, coupled with challenges in consistently maintaining asset turnover efficiency. The financial leverage remained stable with a slight declining trend, indicating prudence in financing. ROE trends reflected the interplay of these factors, revealing variability in generating returns on shareholders' equity over the five-year period.

Tax Burden

The tax burden ratio remained relatively stable over the five-year period, fluctuating slightly between 0.74 and 0.80. This suggests consistent tax efficiency in managing taxable income, with minor variations that do not indicate any significant change in tax strategy or tax rate impact.

Interest Burden

The interest burden ratio has been constant at 1.0 throughout the entire period. This indicates no interest expense was recorded relative to earnings before interest and taxes, suggesting either absence of debt or that interest costs are negligible in comparison to operating income.

EBIT Margin

EBIT margin exhibited variability, initially at 82.01% in 2019, dipping to a low of 72.6% in 2020, before recovering to a peak of 85.23% in 2022 and slightly declining to 81.95% in 2023. This pattern reflects fluctuations in operating profitability, with a notable improvement post-2020, indicating effective cost control or increased operating revenue relative to expenses in recent years.

Asset Turnover

Asset turnover showed a declining trend from 0.82 in 2019 to a low of 0.53 in 2020, followed by a modest recovery to 0.76 in 2022, and then a drop to 0.55 in 2023. Overall, these figures suggest decreasing efficiency in the use of assets to generate sales, with intermittent improvements, possibly reflecting changes in asset base or sales volume.

Financial Leverage

Financial leverage decreased gradually from 1.17 in 2019 to 1.11 in 2023. This decline indicates a slight reduction in reliance on debt or other forms of financial obligations, which could imply a more conservative capital structure or successful deleveraging efforts over time.

Return on Equity (ROE)

Return on equity showed considerable volatility, starting at 62.23% in 2019, dropping sharply to 36.28% in 2020, followed by moderate recoveries to 41.43% in 2021 and 57.75% in 2022, then declining again to 38.88% in 2023. The fluctuations in ROE reflect the combined effects of changes in profitability, asset utilization, and leverage. The peak in 2019 and 2022 indicates periods of strong value generation for shareholders, while lower points reflect challenges in maintaining consistent returns.

Net Profit Margin

The net profit margin demonstrates some variability over the five-year period. It started at a high level of 64.98% in 2019, followed by a decline to 58.19% in 2020. There was a slight recovery in 2021 to 59.87%, reaching its peak at 66.88% in 2022 before a moderate decrease to 64.23% in 2023. Overall, margins remained strong with fluctuations reflecting shifts in profitability management or cost structures.

Asset Turnover

Asset turnover fluctuated noticeably, beginning at 0.82 in 2019 and dropping significantly to 0.53 in 2020. It experienced a minor recovery to 0.59 in 2021 and then a substantial increase to 0.76 in 2022. However, in 2023, asset turnover declined again to 0.55. These movements suggest variability in the efficiency with which the company utilized its assets to generate sales, with a general trend of diminished turnover compared to the initial year.

Return on Assets (ROA)

Return on Assets shows a declining trend from 53.28% in 2019 to 30.8% in 2020. It increased slightly to 35.33% in 2021, followed by a strong rebound to 50.87% in 2022. In the most recent year, 2023, ROA decreased again to 35.08%. This pattern indicates fluctuating overall profitability relative to asset base, potentially influenced by changes in both net income and asset management efficiency during the period.

The financial data presents several noteworthy trends over the five-year period analyzed. The tax burden ratio maintained relative stability, fluctuating slightly between 0.74 and 0.8, indicating consistent tax impacts without significant variation. The interest burden ratio remained constant at 1 throughout the period, suggesting the absence of interest expenses or consistent interest coverage.

Examining profitability metrics, the EBIT margin percentage displayed variability but generally held a strong margin. It started at 82.01% in 2019, declined to 72.6% in 2020, then recovered to peak at 85.23% in 2022 before slightly decreasing to 81.95% in 2023. This pattern indicates resilience and effective cost management, especially after the dip in 2020.

The asset turnover ratio revealed fluctuations with a declining trend overall. After an initial level of 0.82 in 2019, it decreased significantly to 0.53 in 2020. This was followed by a modest recovery to 0.76 in 2022, but it dropped again to 0.55 in 2023. This variable turnover implies changes in asset utilization efficiency, potentially reflecting shifts in operational scale or asset base adjustments.

Return on assets (ROA) exhibited pronounced volatility, moving from a high of 53.28% in 2019 to a low of 30.8% in 2020. It then improved to 50.87% in 2022 before declining again to 35.08% in 2023. ROA fluctuated closely in line with asset turnover and EBIT margin changes, signifying that variations in operational efficiency and profitability directly impacted overall asset returns.

Tax Burden

Stable around 0.74–0.8, with minimal impact on net income fluctuations.

Interest Burden

Constant at 1, indicating no interest expense effects on earnings.

EBIT Margin

Strong profitability margins with a dip during 2020; recovery and resilience evident thereafter.

Asset Turnover

Inconsistent and generally downward trending, suggesting fluctuating efficiency in asset use.

Return on Assets (ROA)

Marked volatility closely associated with EBIT margin and asset turnover dynamics, underscoring varying operational performance.

Tax Burden

The tax burden ratio remained relatively stable over the period, fluctuating slightly between 0.74 and 0.80. The value started at 0.79 in 2019, dipped to 0.74 in 2021, and then stabilized around 0.78 in the subsequent years, indicating consistent tax expense relative to pretax income.

Interest Burden

The interest burden ratio was constant at 1.00 throughout the observed years, suggesting the company maintained negligible or no interest expenses impacting its earnings before taxes. This consistency implies a strong financial position with minimal leverage-related costs.

EBIT Margin

The EBIT margin exhibited some variability but generally reflected strong operational profitability. It started from 82.01% in 2019, experienced a decline to 72.6% in 2020, rebounded to 80.5% in 2021, and peaked at 85.23% in 2022 before slightly decreasing to 81.95% in 2023. This trend reveals resilience in operational efficiency despite some fluctuations.

Net Profit Margin

The net profit margin showed a somewhat parallel pattern to the EBIT margin but with lower values, indicating the impact of other costs and taxes. The margin decreased from 64.98% in 2019 to 58.19% in 2020, followed by a gradual recovery reaching 66.88% in 2022 and a slight decline to 64.23% in 2023. Overall, the company maintained solid bottom-line profitability with moderate year-to-year variations.