Ovintiv Inc (OVV)
Return on total capital
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 2,865,000 | 2,865,000 | 3,731,000 | 4,727,000 | 3,871,000 | 4,157,000 | 2,806,000 | 1,187,000 | 1,579,000 | -430,000 | -1,899,000 | -5,796,000 | -5,359,000 | -4,780,000 | |||
| Long-term debt | US$ in thousands | 5,453,000 | 5,454,000 | 5,454,000 | 3,176,000 | 3,177,000 | 3,178,000 | 3,687,000 | 4,775,000 | 4,786,000 | 4,791,000 | 4,796,000 | 5,300,000 | 6,367,000 | 7,142,000 | 7,366,000 | 7,006,000 | 6,974,000 |
| Total stockholders’ equity | US$ in thousands | 10,370,000 | 9,552,000 | 9,316,000 | 7,894,000 | 7,689,000 | 6,550,000 | 5,821,000 | 4,684,000 | 5,074,000 | 3,797,000 | 3,934,000 | 4,134,000 | 3,837,000 | 4,352,000 | 5,873,000 | 10,191,000 | 9,930,000 |
| Return on total capital | 18.11% | 19.09% | 25.26% | 42.70% | 35.62% | 42.73% | 29.51% | 12.55% | 16.01% | -5.01% | -21.75% | -61.44% | -52.52% | -41.59% |
December 31, 2023 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $2,865,000K ÷ ($5,453,000K + $10,370,000K)
= 18.11%
To analyze Ovintiv Inc's return on total capital, we calculated the return on total capital for each quarter provided. The return on total capital represents the company's ability to generate a return for both debt and equity holders.
Based on the data, Ovintiv Inc's return on total capital has shown fluctuations over the quarters. In Q1 2023, the return on total capital was quite impressive at 39.95%, indicating efficient utilization of both debt and equity capital to generate profits. This was a significant improvement compared to the 33.26% in Q4 2022.
The return on total capital remained relatively high in Q3 2023 at 17.61% and Q4 2023 at 17.26%. However, in Q2 2023, there was a notable spike with a return on total capital of 23.77%.
It is essential to note the significant fluctuation in Q2 2022, where the return on total capital dropped to 27.51% from the comparatively higher 39.80% in Q3 2022. Additionally, in Q1 2022, the return on total capital was lower at 11.01%.
Overall, Ovintiv Inc has demonstrated the ability to effectively utilize its capital resources to generate returns for both debt and equity holders, with varying levels of performance across the presented quarters. The company's ability to maintain a relatively high return on total capital indicates efficient capital management practices and effective allocation of resources.
Peer comparison
Dec 31, 2023