SM Energy Co (SM)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 45.86% | 47.17% | 63.40% | 50.74% | -4.40% |
| Operating profit margin | 40.27% | 41.57% | 47.21% | 44.09% | -19.40% |
| Pretax margin | 36.17% | 38.51% | 41.72% | 1.78% | -84.92% |
| Net profit margin | 28.84% | 34.45% | 33.23% | 1.39% | -67.87% |
SM Energy Co has shown improvement in its profitability ratios over the past years.
The gross profit margin has significantly improved from a negative 4.40% in 2020 to 63.40% in 2022, showing a strong increase in the company's ability to generate profit from its core business activities. However, there was a slight decrease to 45.86% in 2024, indicating a potential decrease in efficiency or an increase in production costs.
Similarly, the operating profit margin has also improved consistently, from negative 19.40% in 2020 to 47.21% in 2022, reflecting the company's ability to control its operating expenses and generate profits from its operations. The operating profit margin slightly declined to 40.27% in 2024, indicating a possible increase in operating expenses or a slowdown in revenue growth.
The pretax margin has shown a remarkable recovery from negative 84.92% in 2020 to 41.72% in 2022, indicating the effectiveness of the company in improving its operational efficiency and profitability before accounting for taxes. However, there was a slight decrease to 36.17% in 2024, signifying potential challenges in sustaining the high levels of profitability.
Lastly, the net profit margin has also demonstrated improvement over the years. From a negative 67.87% in 2020, it increased to 34.45% in 2023, highlighting the company's ability to effectively manage its expenses and generate net profit. Although there was a slight decline to 28.84% in 2024, the overall trend indicates a positive trajectory in the company's profitability.
In conclusion, SM Energy Co has shown consistent improvement in its profitability ratios, indicating better operational efficiency and financial performance over the years. Continued monitoring of these ratios will be important to assess the company's ability to maintain and improve its profitability in the future.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 12.54% | 15.47% | 27.63% | 21.88% | -4.39% |
| Return on assets (ROA) | 8.98% | 12.82% | 19.45% | 0.69% | -15.36% |
| Return on total capital | 26.12% | 27.82% | 51.19% | 10.14% | -39.47% |
| Return on equity (ROE) | 18.18% | 22.62% | 36.04% | 1.76% | -37.92% |
Based on the provided data, we can analyze several profitability ratios for SM Energy Co:
1. Operating Return on Assets (Operating ROA):
- In 2020, the Operating ROA was -4.39%, indicating that the company had a negative operating return on its assets.
- From 2021 to 2022, there was a significant improvement in the Operating ROA, with a notable increase to 27.63% by the end of 2022.
- However, there was a slight decline in the Operating ROA in 2023 and 2024, but it remained above 10%.
2. Return on Assets (ROA):
- ROA was negative in 2020 but gradually improved to 8.98% by the end of 2024.
- The company showed a positive ROA from 2021 onwards, indicating a better utilization of assets to generate profits.
3. Return on Total Capital:
- The Return on Total Capital was severely negative in 2020 but improved significantly to 51.19% by the end of 2022.
- There was a slight decrease in this ratio in subsequent years, but it remained above 25%, indicating efficient capital utilization.
4. Return on Equity (ROE):
- ROE was negative in 2020 but turned positive in 2021 and increased further in the following years.
- The ROE peaked in 2022 at 36.04% and then slightly declined in the subsequent years but remained above 18%.
Overall, the profitability ratios of SM Energy Co improved significantly from 2020 to 2022, indicating better operational efficiency and profitability. However, there was a slight decline in some ratios in the later years, which may warrant further investigation to ensure sustained profitability and efficient utilization of resources.