Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Valero Energy Corp., profitability ratios
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).
The profitability ratios exhibit a cyclical trend characterized by a sharp contraction in 2020, followed by a robust recovery and a peak in 2022, with a slight moderation occurring in 2023.
- Profit Margin Analysis
- A synchronized decline is observed across gross, operating, and net profit margins in 2020, where all three metrics turned negative. Specifically, the net profit margin fell to -2.19%. A strong recovery phase began in 2021 and peaked in 2022, with the gross profit margin reaching 9.52% and the net profit margin hitting 6.54%. By 2023, these margins experienced a slight contraction, with the net profit margin settling at 6.10%.
- Return on Equity (ROE)
- The return on equity demonstrated extreme volatility over the five-year period. After a decline to -7.56% in 2020, ROE surged to 48.93% in 2022, representing the most significant percentage increase among all analyzed ratios. Although this figure normalized to 33.53% in 2023, it remains substantially higher than the 11.11% recorded in 2019.
- Return on Assets (ROA)
- Return on assets followed a trajectory similar to ROE, dropping to -2.74% in 2020 before climbing to a peak of 18.90% in 2022. The 2023 ROA of 14.01% indicates a sustained improvement in the efficiency of asset utilization compared to the 4.50% observed at the start of the period in 2019.
Overall, the data indicates a period of significant financial stress in 2020, followed by a period of exceptional profitability and capital efficiency in 2022 and 2023, which exceeds the performance levels seen in 2019.
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Gross Profit Margin
Valero Energy Corp., gross profit margin calculation
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 2023 Calculation
Gross profit margin = 100 × Gross profit (loss) ÷ Revenues, includes excise taxes on sales by certain of foreign operations
= 100 × 12,932 ÷ 144,766 = 8.93%
The gross profit margin exhibits significant volatility over the five-year period from 2019 to 2023, characterized by a sharp contraction in 2020 followed by a substantial recovery and expansion in subsequent years.
- Profitability Volatility and Recovery
- A transition from a positive gross profit margin of 4.41% in 2019 to a negative 1.14% in 2020 indicates a period of severe operational pressure where costs exceeded revenues. This coincides with a significant reduction in revenues, which dropped from 108.32 billion US dollars to 64.91 billion US dollars. A partial recovery was observed in 2021, with the margin returning to a positive 2.75%.
- Peak Performance and Expansion
- The fiscal year 2022 represents a peak in profitability, as the gross profit margin increased sharply to 9.52%. During this period, revenues reached a five-year high of 176.38 billion US dollars, and gross profit surged to 16.80 billion US dollars, reflecting a substantial expansion in the spread between sales and cost of goods sold.
- Normalization and Stabilization
- A slight moderation is observed in 2023, with the gross profit margin declining to 8.93%. While revenues decreased to 144.77 billion US dollars and gross profit fell to 12.93 billion US dollars, the margin remains significantly higher than the levels recorded during the 2019-2021 period, suggesting a higher structural profitability floor.
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Operating Profit Margin
Valero Energy Corp., operating 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) | ||||||
| Operating income (loss) | 11,858) | 15,690) | 2,130) | (1,579) | 3,836) | |
| Revenues, includes excise taxes on sales by certain of foreign operations | 144,766) | 176,383) | 113,977) | 64,912) | 108,324) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 8.19% | 8.90% | 1.87% | -2.43% | 3.54% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Chevron Corp. | 15.37% | 21.42% | 14.81% | — | — | |
| ConocoPhillips | 30.57% | 36.80% | 29.84% | — | — | |
| ExxonMobil Holdings Corp. | 16.24% | 19.82% | 11.91% | — | — | |
| Operating Profit Margin, Sector | ||||||
| Oil, Gas & Consumable Fuels | 17.32% | 22.22% | 14.57% | — | — | |
| Operating Profit Margin, Industry | ||||||
| Energy | 17.27% | 21.94% | 14.46% | — | — | |
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 2023 Calculation
Operating profit margin = 100 × Operating income (loss) ÷ Revenues, includes excise taxes on sales by certain of foreign operations
= 100 × 11,858 ÷ 144,766 = 8.19%
2 Click competitor name to see calculations.
The operating profit margin exhibited significant volatility between 2019 and 2023, characterized by a sharp contraction in 2020, a subsequent recovery in 2021, and a peak in 2022. While there was a slight correction in 2023, the profitability levels remained substantially higher than those recorded during the initial three-year period.
- Margin Volatility and Initial Recovery (2019-2021)
- A transition from a 3.54% margin in 2019 to a negative 2.43% in 2020 was observed, coinciding with a substantial decrease in revenues from 108,324 million to 64,912 million. This period of operating loss was followed by a recovery in 2021, where revenues rose to 113,977 million and the operating profit margin returned to a positive 1.87%.
- Peak Performance and Expansion (2022)
- A dramatic expansion in profitability occurred in 2022, with the operating profit margin reaching a five-year peak of 8.90%. This growth was driven by a significant surge in revenues to 176,383 million and a corresponding increase in operating income to 15,690 million, marking the most profitable year in the analyzed sequence.
- Stabilization and Current Trend (2023)
- In 2023, a moderate decline was noted as revenues decreased to 144,766 million and operating income fell to 11,858 million. Despite these reductions, the operating profit margin remained resilient at 8.19%, indicating that profitability has stabilized at a level significantly above the pre-2022 baseline.
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Net Profit Margin
Valero Energy Corp., net 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) | ||||||
| Net income (loss) attributable to Valero Energy Corporation stockholders | 8,835) | 11,528) | 930) | (1,421) | 2,422) | |
| Revenues, includes excise taxes on sales by certain of foreign operations | 144,766) | 176,383) | 113,977) | 64,912) | 108,324) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 6.10% | 6.54% | 0.82% | -2.19% | 2.24% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Chevron Corp. | 10.85% | 15.05% | 10.04% | — | — | |
| ConocoPhillips | 19.52% | 23.80% | 17.63% | — | — | |
| ExxonMobil Holdings Corp. | 10.76% | 13.98% | 8.33% | — | — | |
| Net Profit Margin, Sector | ||||||
| Oil, Gas & Consumable Fuels | 11.63% | 15.41% | 9.78% | — | — | |
| Net Profit Margin, Industry | ||||||
| Energy | 11.68% | 15.29% | 9.70% | — | — | |
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 2023 Calculation
Net profit margin = 100 × Net income (loss) attributable to Valero Energy Corporation stockholders ÷ Revenues, includes excise taxes on sales by certain of foreign operations
= 100 × 8,835 ÷ 144,766 = 6.10%
2 Click competitor name to see calculations.
The financial trajectory from 2019 through 2023 exhibits a period of extreme volatility followed by a significant expansion in profitability margins. The transition from a net loss in 2020 to record highs in 2022 indicates a substantial shift in operational efficiency or market conditions.
- Net Profit Margin Trends
- A precipitous decline is noted between 2019 and 2020, where the net profit margin shifted from 2.24% to -2.19%. This downturn was followed by a partial recovery in 2021 to 0.82%, before experiencing a sharp acceleration to 6.54% in 2022. The margin remained relatively resilient in 2023, concluding the period at 6.10%.
- Revenue and Income Correlation
- Revenue fluctuated significantly, reaching a low of 64,912 million US dollars in 2020 and a peak of 176,383 million US dollars in 2022. The correlation between revenue growth and net income became markedly more positive in the latter two years; specifically, net income rose from 930 million US dollars in 2021 to 11,528 million US dollars in 2022, representing a disproportionate increase in profitability relative to the growth in top-line revenue.
- Comparative Profitability Analysis
- The profitability levels observed in 2022 and 2023 represent a structural step-up compared to the 2019-2021 period. The net profit margin of 6.10% in 2023 is approximately 2.7 times the margin recorded in 2019, despite 2023 revenues being only 33% higher than 2019 levels. This indicates a significant improvement in the conversion of revenue into net income.
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Return on Equity (ROE)
Valero Energy Corp., ROE 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 income (loss) attributable to Valero Energy Corporation stockholders | 8,835) | 11,528) | 930) | (1,421) | 2,422) | |
| Total Valero Energy Corporation stockholders’ equity | 26,346) | 23,561) | 18,430) | 18,801) | 21,803) | |
| Profitability Ratio | ||||||
| ROE1 | 33.53% | 48.93% | 5.05% | -7.56% | 11.11% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Chevron Corp. | 13.28% | 22.27% | 11.24% | — | — | |
| ConocoPhillips | 22.23% | 38.91% | 17.79% | — | — | |
| ExxonMobil Holdings Corp. | 17.58% | 28.58% | 13.67% | — | — | |
| ROE, Sector | ||||||
| Oil, Gas & Consumable Fuels | 16.46% | 27.31% | 13.24% | — | — | |
| ROE, Industry | ||||||
| Energy | 16.67% | 26.98% | 13.21% | — | — | |
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 2023 Calculation
ROE = 100 × Net income (loss) attributable to Valero Energy Corporation stockholders ÷ Total Valero Energy Corporation stockholders’ equity
= 100 × 8,835 ÷ 26,346 = 33.53%
2 Click competitor name to see calculations.
The analysis of profitability ratios reveals a period of significant volatility followed by a substantial expansion in shareholder returns between 2019 and 2023. The return on equity (ROE) experienced a sharp decline into negative territory before reaching an exceptional peak and subsequently stabilizing at a high level.
- Return on Equity Volatility
- ROE fluctuated from 11.11% in 2019 to a low of -7.56% in 2020, coinciding with a net loss of 1,421 million US$. A recovery phase followed in 2021 with an ROE of 5.05%, leading to a dramatic increase to 48.93% in 2022. By 2023, the ratio moderated to 33.53%, indicating a normalization of earnings relative to the equity base.
- Net Income Trajectory
- The primary driver of ROE variance was the extreme volatility in net income. Earnings shifted from a loss of 1,421 million US$ in 2020 to a peak of 11,528 million US$ in 2022. The 2023 net income of 8,835 million US$ remains significantly higher than pre-2022 levels, sustaining an elevated ROE despite the year-over-year decrease from the 2022 peak.
- Equity Base Expansion
- Total stockholders' equity remained relatively stable between 2019 and 2021, ranging from 18,430 million US$ to 21,803 million US$. A steady growth trend emerged starting in 2022, with equity increasing to 26,346 million US$ by 2023. This expansion of the equity base contributed to the decline in ROE in 2023, as the denominator increased while net income concurrently contracted.
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Return on Assets (ROA)
Valero Energy Corp., ROA 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 income (loss) attributable to Valero Energy Corporation stockholders | 8,835) | 11,528) | 930) | (1,421) | 2,422) | |
| Total assets | 63,056) | 60,982) | 57,888) | 51,774) | 53,864) | |
| Profitability Ratio | ||||||
| ROA1 | 14.01% | 18.90% | 1.61% | -2.74% | 4.50% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Chevron Corp. | 8.17% | 13.76% | 6.52% | — | — | |
| ConocoPhillips | 11.42% | 19.91% | 8.91% | — | — | |
| ExxonMobil Holdings Corp. | 9.57% | 15.10% | 6.80% | — | — | |
| ROA, Sector | ||||||
| Oil, Gas & Consumable Fuels | 9.31% | 15.25% | 6.99% | — | — | |
| ROA, Industry | ||||||
| Energy | 9.28% | 14.84% | 6.84% | — | — | |
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 2023 Calculation
ROA = 100 × Net income (loss) attributable to Valero Energy Corporation stockholders ÷ Total assets
= 100 × 8,835 ÷ 63,056 = 14.01%
2 Click competitor name to see calculations.
The analysis of Return on Assets (ROA) reveals a period of significant volatility followed by a substantial increase in asset productivity between 2019 and 2023. The trajectory is characterized by a sharp contraction in 2020, a gradual recovery in 2021, and a peak in profitability efficiency during the 2022-2023 period.
- Profitability Volatility and Recovery
- A significant decline in asset efficiency occurred between 2019 and 2020, with ROA dropping from 4.50% to -2.74%. This decline coincided with a transition from a net income of 2,422 million US$ to a net loss of 1,421 million US$. A recovery phase began in 2021, as net income returned to positive territory at 930 million US$, lifting the ROA to 1.61%.
- Peak Efficiency and Performance Surge
- A dramatic increase in ROA is observed in 2022, reaching a five-year peak of 18.90%. This surge was driven by a substantial increase in net income to 11,528 million US$, representing the highest profitability level in the analyzed period despite a continuing increase in the total asset base.
- Asset Base Expansion and Stabilization
- Total assets exhibited a consistent upward trend from 2020 onward, growing from 51,774 million US$ to 63,056 million US$ by the end of 2023. While ROA moderated to 14.01% in 2023 due to a decrease in net income to 8,835 million US$, the ratio remains significantly higher than pre-2022 levels, indicating a sustained improvement in the company's ability to generate earnings from its asset base.
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