Chevron Corp (CVX)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 36.84% | 38.24% | 41.08% | 36.26% | 33.98% |
| Operating profit margin | 22.40% | 26.45% | 25.85% | 10.35% | 16.56% |
| Pretax margin | 14.70% | 20.11% | 13.28% | -7.85% | 3.83% |
| Net profit margin | 10.63% | 14.40% | 9.62% | -5.85% | 2.00% |
Chevron Corp.'s profitability ratios highlight fluctuations over the past five years. The gross profit margin, a measure of efficiency in production and pricing, saw an overall decline from 2019 to 2022 but slightly improved in 2023. This may indicate challenges in managing production costs and pricing strategies.
The operating profit margin, which reflects the company's ability to control operating expenses, peaked in 2022 but showed a significant drop in 2023, suggesting potential challenges in cost management. Despite the fluctuations, the company still maintained a positive operating profit margin throughout the period.
The pretax margin, indicating the company's ability to generate profits before taxes, fluctuated significantly, turning negative in 2020 and 2021 before rebounding in subsequent years. This points to variability in the company's ability to generate profits before tax expenses, possibly due to factors such as fluctuating oil prices or operating challenges.
Chevron Corp.'s net profit margin, a key indicator of overall profitability, saw a similar trend to the pretax margin, turning negative in 2020 and 2021 before recovering in subsequent years. The company managed to return to positive net profit margins from 2022 onwards, indicating improved profitability despite facing challenges in the past.
Overall, Chevron Corp.'s profitability ratios show a mixture of positive and negative trends, reflecting the company's resilience in navigating through changing market conditions and internal challenges to sustain profitability over the years.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 17.20% | 25.27% | 17.54% | 4.09% | 10.22% |
| Return on assets (ROA) | 8.17% | 13.76% | 6.52% | -2.31% | 1.23% |
| Return on total capital | 18.67% | 31.36% | 15.99% | -5.02% | 4.46% |
| Return on equity (ROE) | 13.28% | 22.27% | 11.24% | -4.21% | 2.03% |
When analyzing Chevron Corp.'s profitability ratios over the past five years, several important insights emerge.
1. Operating Return on Assets (Operating ROA):
- Chevron's Operating ROA has fluctuated over the years, ranging from -2.74% in 2020 to 15.50% in 2022. The ratio decreased to 10.03% in 2023.
- This ratio indicates the company's ability to generate operating profits from its assets. The decreasing trend in recent years may suggest challenges in effectively utilizing assets to generate operating income.
2. Return on Assets (ROA):
- Chevron's ROA has shown a similar pattern to Operating ROA, with values ranging from -2.31% in 2020 to 13.76% in 2022. The ratio decreased to 8.17% in 2023.
- ROA reflects the company's overall ability to generate profits from its total assets. The decreasing trend may indicate inefficiencies in converting assets into profits.
3. Return on Total Capital:
- Chevron's Return on Total Capital has also exhibited variability, with values ranging from -3.73% in 2020 to 26.58% in 2022. The ratio decreased to 17.25% in 2023.
- This ratio provides insight into the company's ability to generate returns for both debt and equity investors. The fluctuations suggest changing capital utilization efficiency.
4. Return on Equity (ROE):
- Chevron's ROE has followed a similar trend to other profitability ratios, fluctuating from -4.21% in 2020 to 22.27% in 2022. The ratio decreased to 13.28% in 2023.
- ROE indicates the company's ability to generate returns for its shareholders. The decreasing trend may signal challenges in delivering returns on shareholder equity.
In conclusion, Chevron Corp.'s profitability ratios have displayed variability and downward trends in recent years. The company may need to focus on operational efficiency, asset utilization, and capital allocation to improve its profitability metrics and generate sustainable returns for its stakeholders.