Diamondback Energy Inc. (NASDAQ:FANG)

Debt to Equity

The debt to equity ratio exhibited a steady increase from 0.28 at the end of 2017 to a peak of 0.66 in 2020, indicating a rising reliance on debt financing relative to equity during this period. However, in 2021, the ratio declined to 0.55, suggesting a moderate reduction in leverage compared to the previous year.

Debt to Capital

This ratio reflected a similar upward trend, increasing from 0.22 in 2017 to 0.40 in 2020, implying that debt became a larger proportion of the overall capital structure. The ratio then decreased to 0.36 in 2021, which aligns with the partial deleveraging observed in the debt to equity ratio.

Debt to Assets

The debt to assets ratio increased consecutively from 0.19 in 2017 to 0.33 in 2020, highlighting a growing share of assets financed through debt. In 2021, this ratio dropped slightly to 0.29, consistent with the trends in other leverage measures.

Financial Leverage

Financial leverage rose progressively from 1.48 in 2017 to 2.00 in 2020, indicating that the company amplified its use of borrowed funds relative to equity. In 2021, financial leverage decreased to 1.89, which suggests a strategic reduction in leverage exposure.

Interest Coverage

The interest coverage ratio showed significant volatility over the period. It improved from 13.89 in 2017 to 15.38 in 2018, suggesting strong ability to cover interest expenses. However, this ratio dropped sharply to 3.14 in 2019 and turned negative (-28.62) in 2020, implying the company faced considerable difficulties in covering interest costs that year. In 2021, the interest coverage ratio recovered substantially to 16.38, indicating a renewed capacity to service debt effectively.

Over the five-year period analyzed, several notable trends emerge concerning the company’s financial leverage and capital structure. Total debt has exhibited a substantial upward trajectory, increasing from $1,477 million at the end of 2017 to $6,687 million by the end of 2021. This growth in debt indicates a significant increase in the company's borrowing over the period.

Stockholders’ equity also expanded substantially from $5,255 million in 2017, reaching a peak of $13,699 million at the end of 2018 before experiencing a decline in 2019 and 2020. However, equity saw a partial recovery in 2021, rising again to $12,088 million. Despite some fluctuations, equity levels at the end of the period remained markedly higher than at the start of the timeline.

The debt-to-equity ratio, which measures financial leverage relative to shareholders' equity, shows an overall increase but with notable fluctuations. Starting from a low of 0.28 in 2017, it rose slightly to 0.33 in 2018 and continued to increase through 2019, reaching 0.41. In 2020, the ratio jumped sharply to 0.66, suggesting that debt grew disproportionately compared to equity during that year. By 2021, the ratio improved to 0.55, indicating a modest reduction in leverage relative to equity but still substantially higher than the early years.

In summary, the data displays a pattern of aggressive debt accumulation outpacing equity growth for much of the period, particularly in 2020. Although there was a slight deleveraging in 2021, the company overall increased its reliance on debt financing over these five years, which may have implications for its financial risk and capital cost considerations.

Total Debt

The total debt exhibited a significant upward trend over the five-year period. Starting from $1,477 million in 2017, the debt increased markedly to $4,464 million in 2018, followed by steady increases to $5,371 million in 2019, $5,815 million in 2020, and reaching $6,687 million by the end of 2021. This represents more than a fourfold increase from 2017 to 2021, indicating a growing reliance on debt financing.

Total Capital

Total capital also showed considerable growth across the same period, rising from $6,732 million in 2017 to a peak of $18,620 million in 2019. After a decline to $14,609 million in 2020, total capital rebounded to $18,775 million in 2021, slightly exceeding the 2019 level. This fluctuation indicates periods of capital adjustment, possibly reflecting strategic investments or changes in the company’s capital structure.

Debt to Capital Ratio

The debt to capital ratio revealed a rising trend until 2020, increasing from 0.22 in 2017 to a peak of 0.40 in 2020. This suggests an increasing proportion of debt within the total capital structure during those years. However, the ratio decreased somewhat to 0.36 by the end of 2021, indicating a slight reduction in leverage relative to capital despite the continued increase in absolute debt levels. This decline may be associated with the recovery in total capital observed in 2021.

Total Debt

The total debt exhibited a significant increase from 2017 to 2021. Starting at 1,477 million US dollars in 2017, it rose sharply to 4,464 million in 2018, followed by a continued upward trend reaching 6,687 million by the end of 2021. This represents more than a fourfold increase over the five-year period.

Total Assets

Total assets also showed a marked growth from 7,771 million US dollars in 2017 to a peak of 23,531 million in 2019. Although there was a decline to 17,619 million in 2020, assets rebounded to 22,898 million in 2021. Overall, the asset base more than doubled relative to the initial value, despite some volatility between 2019 and 2020.

Debt to Assets Ratio

The debt to assets ratio followed an increasing trend from 0.19 in 2017 to a high of 0.33 in 2020, indicating a rising leverage position relative to assets during that period. However, in 2021, the ratio decreased slightly to 0.29, suggesting an improved asset coverage of debt or a shift in the capital structure. Despite this recent improvement, the ratio remains elevated compared to the earlier years, indicating higher financial leverage than at the start of the period analyzed.

The financial data over the five-year period reveals notable fluctuations in the company's asset base, equity, and leverage ratios. The total assets exhibit significant variability, showing an overall upward trend from 7,771 million US dollars at the end of 2017 to 22,898 million US dollars by the end of 2021. This includes a substantial increase in 2018, followed by moderate growth and an intervening decline in 2020 before rising again in 2021.

Stockholders' equity also experienced considerable changes, increasing sharply from 5,255 million US dollars in 2017 to a peak of 13,699 million US dollars in 2018. Subsequently, equity slightly decreased and stabilized around the 13,000 million dollar mark in 2019 before contracting to 8,794 million US dollars at the end of 2020. However, the equity value showed a recovery in 2021, reaching 12,088 million US dollars.

The financial leverage ratio, which measures the level of debt relative to equity, indicates a steady increase from 1.48 in 2017 to a high of 2.00 in 2020, implying growing reliance on debt financing. There was a slight decrease in this ratio in 2021 to 1.89, suggesting a modest reduction in leverage but maintaining a higher level compared to the earlier years.

Key observations:

1. The company expanded its asset base significantly, especially in 2018, with some volatility thereafter.

2. Stockholders’ equity peaked in 2018, followed by a decline in the subsequent two years, then partial recovery in 2021.

3. Financial leverage increased steadily, reaching its highest point in 2020, before a slight reduction in 2021.

4. The rising leverage ratio alongside fluctuating equity suggests the company increased debt financing to support growth or operational needs during this period.

Overall, the data implies a strategic expansion involving increased asset accumulation and a higher debt load, with some fluctuations in equity that may have influenced the balance of financial risk and capital structure during the period analyzed.

Earnings before interest and tax (EBIT)

The EBIT exhibited significant volatility over the analyzed period. It increased notably from $536 million in 2017 to $1,191 million in 2018, followed by a sharp decline to $531 million in 2019. In 2020, EBIT turned negative with a substantial loss of $5,581 million, before rebounding strongly to a positive $3,096 million in 2021. This pattern indicates considerable fluctuations in operating profitability with a severe downturn in 2020 and recovery thereafter.

Interest expense, less capitalized interest

Interest expense showed a consistent upward trend from $39 million in 2017 to $195 million in 2020, slightly decreasing to $189 million in 2021. The gradual increase suggests growing financing costs or higher debt levels over time, with a minor reduction in the last year observed.

Interest coverage ratio

The interest coverage ratio mirrored the EBIT trend, starting high at 13.89 in 2017 and increasing to 15.38 in 2018, indicating strong ability to cover interest expenses. It then declined drastically to 3.14 in 2019, plummeted to a negative ratio of -28.62 in 2020 due to operating losses, and recovered to 16.38 in 2021. The negative coverage in 2020 highlights the company's inability to meet interest obligations from operating earnings during that year, while the strong recovery in 2021 reflects improved financial health.