Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Hess Corp., profitability ratios
Based on: 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), 10-K (reporting date: 2018-12-31).
The financial performance between 2018 and 2022 is characterized by a period of extreme volatility, marked by a severe contraction in 2020 followed by a rapid and robust recovery. All profitability indicators reached critical lows during the 2020 fiscal year before pivoting to significant positive values by the end of the period.
- Operating Profit Margin
- The operating margin remained relatively stable between 2018 and 2019 before collapsing to -51.04% in 2020. A strong recovery followed, with the margin climbing to 26.37% in 2021 and reaching a peak of 35.67% by December 31, 2022, indicating a substantial improvement in operational efficiency and a reversal of the previous downturn.
- Net Profit Margin
- Net margins were negative from 2018 through 2020, experiencing a catastrophic decline to -66.27% in 2020. The trend reversed sharply in 2021 as the margin turned positive at 7.48%, eventually rising to 18.51% in 2022, reflecting a transition from significant net losses to strong bottom-line profitability.
- Return on Equity (ROE)
- ROE mirrored the trajectory of net profitability, sliding from -2.93% in 2018 to a low of -57.64% in 2020. The subsequent recovery was aggressive, with ROE shifting to 8.87% in 2021 and expanding to 26.68% by 2022, demonstrating a marked increase in the returns generated on shareholder equity.
- Return on Assets (ROA)
- ROA followed a similar pattern of decline and recovery, falling from -1.32% in 2018 to -16.43% in 2020. By the end of the analysis period, the ROA had returned to positive territory, reaching 9.66% in 2022, which indicates a recovered ability to generate earnings from the total asset base.
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Return on Sales
Return on Investment
Operating Profit Margin
Hess Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Income (loss) before interest and income taxes | 4,039) | 1,971) | (2,382) | 601) | 672) | |
| Sales and other operating revenues | 11,324) | 7,473) | 4,667) | 6,495) | 6,323) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 35.67% | 26.37% | -51.04% | 9.25% | 10.63% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Chevron Corp. | 21.42% | 14.81% | — | — | — | |
| ConocoPhillips | 36.80% | 29.84% | — | — | — | |
| Exxon Mobil Corp. | 19.82% | 11.91% | — | — | — | |
| Operating Profit Margin, Sector | ||||||
| Oil, Gas & Consumable Fuels | 22.22% | 14.57% | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Energy | 21.94% | 14.46% | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Operating profit margin = 100 × Income (loss) before interest and income taxes ÷ Sales and other operating revenues
= 100 × 4,039 ÷ 11,324 = 35.67%
2 Click competitor name to see calculations.
The operational profitability exhibits a volatile trajectory over the five-year period, characterized by a significant contraction in 2020 followed by a robust expansion through 2022.
- Revenue Trends
- Sales and other operating revenues remained relatively stable between 2018 and 2019, followed by a sharp decline to 4,667 million US dollars in 2020. A strong recovery followed, with revenues increasing to 7,473 million US dollars in 2021 and peaking at 11,324 million US dollars by the end of 2022.
- Operating Income Performance
- Income before interest and income taxes experienced a severe downturn, moving from 601 million US dollars in 2019 to a deficit of 2,382 million US dollars in 2020. A substantial reversal occurred in the subsequent two years, with operating income rising to 1,971 million US dollars in 2021 and reaching 4,039 million US dollars in 2022.
- Operating Profit Margin Evolution
- The operating profit margin reflects extreme volatility, descending from 10.63% in 2018 to a low of -51.04% in 2020. The recovery phase demonstrated a rapid improvement in operational efficiency, as the margin climbed to 26.37% in 2021 and reached a period high of 35.67% in 2022.
The overall pattern indicates a successful transition from a period of acute operational distress to a state of significantly enhanced profitability. The final observed margin in 2022 represents a substantial improvement over the pre-crisis levels seen in 2018 and 2019.
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Net Profit Margin
Hess Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Hess Corporation | 2,096) | 559) | (3,093) | (408) | (282) | |
| Sales and other operating revenues | 11,324) | 7,473) | 4,667) | 6,495) | 6,323) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 18.51% | 7.48% | -66.27% | -6.28% | -4.46% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Chevron Corp. | 15.05% | 10.04% | — | — | — | |
| ConocoPhillips | 23.80% | 17.63% | — | — | — | |
| Exxon Mobil Corp. | 13.98% | 8.33% | — | — | — | |
| Net Profit Margin, Sector | ||||||
| Oil, Gas & Consumable Fuels | 15.41% | 9.78% | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Energy | 15.29% | 9.70% | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net profit margin = 100 × Net income (loss) attributable to Hess Corporation ÷ Sales and other operating revenues
= 100 × 2,096 ÷ 11,324 = 18.51%
2 Click competitor name to see calculations.
The financial performance from 2018 to 2022 exhibits a profound cyclical recovery, characterized by an initial period of deepening losses followed by a rapid transition to significant profitability.
- Net Profit Margin Volatility
- A severe deterioration in profitability is observed between 2018 and 2020. The net profit margin declined from -4.46% in 2018 to -6.28% in 2019, culminating in a sharp drop to -66.27% in 2020. This suggests that net losses expanded at a rate far disproportionate to the decline in operating revenues during that period.
- Revenue and Earnings Recovery
- A decisive positive inflection occurred in 2021, as the company returned to profitability with a net profit margin of 7.48%. This upward trend accelerated in 2022, with the margin expanding to 18.51%. This recovery is closely linked to a substantial increase in sales and other operating revenues, which grew from 4,667 million US$ in 2020 to 11,324 million US$ in 2022.
- Operating Leverage and Bottom-Line Growth
- The data indicates a strong correlation between revenue growth and margin expansion. The transition from a net loss of 3,093 million US$ in 2020 to a net income of 2,096 million US$ in 2022 demonstrates significant operating leverage, where the increase in top-line revenue facilitated a rapid and substantial improvement in the net profit margin.
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Return on Equity (ROE)
Hess Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Hess Corporation | 2,096) | 559) | (3,093) | (408) | (282) | |
| Total Hess Corporation stockholders’ equity | 7,855) | 6,300) | 5,366) | 8,732) | 9,629) | |
| Profitability Ratio | ||||||
| ROE1 | 26.68% | 8.87% | -57.64% | -4.67% | -2.93% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Chevron Corp. | 22.27% | 11.24% | — | — | — | |
| ConocoPhillips | 38.91% | 17.79% | — | — | — | |
| Exxon Mobil Corp. | 28.58% | 13.67% | — | — | — | |
| ROE, Sector | ||||||
| Oil, Gas & Consumable Fuels | 27.31% | 13.24% | — | — | — | |
| ROE, Industry | ||||||
| Energy | 26.98% | 13.21% | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
ROE = 100 × Net income (loss) attributable to Hess Corporation ÷ Total Hess Corporation stockholders’ equity
= 100 × 2,096 ÷ 7,855 = 26.68%
2 Click competitor name to see calculations.
The financial performance from 2018 through 2022 exhibits a cycle of significant contraction followed by a robust recovery in profitability and shareholder value.
- Net Income Trends
- A period of sustained losses occurred between 2018 and 2020, culminating in a substantial loss of US$ 3,093 million in 2020. This trend reversed sharply in 2021, as net income shifted to a positive US$ 559 million, followed by a significant increase to US$ 2,096 million by the end of 2022.
- Stockholders' Equity Fluctuations
- Total equity experienced a downward trajectory from 2018 to 2020, decreasing from US$ 9,629 million to a trough of US$ 5,366 million. Following this decline, equity levels began a recovery phase, rising to US$ 6,300 million in 2021 and reaching US$ 7,855 million by December 31, 2022.
- Return on Equity (ROE) Dynamics
- ROE performance mirrors the volatility of net income, moving from -2.93% in 2018 to a critical low of -57.64% in 2020. A positive transition occurred in 2021 with an ROE of 8.87%, which accelerated to 26.68% in 2022, signaling a marked improvement in the company's ability to generate profit from its equity base.
The data indicates a strong correlation between the deep net loss and the contraction of equity in 2020, followed by an aggressive recovery. The rapid expansion of ROE in the final two years suggests that the increase in net income outpaced the growth in stockholders' equity, resulting in enhanced capital efficiency.
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Return on Assets (ROA)
Hess Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Hess Corporation | 2,096) | 559) | (3,093) | (408) | (282) | |
| Total assets | 21,695) | 20,515) | 18,821) | 21,782) | 21,433) | |
| Profitability Ratio | ||||||
| ROA1 | 9.66% | 2.72% | -16.43% | -1.87% | -1.32% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Chevron Corp. | 13.76% | 6.52% | — | — | — | |
| ConocoPhillips | 19.91% | 8.91% | — | — | — | |
| Exxon Mobil Corp. | 15.10% | 6.80% | — | — | — | |
| ROA, Sector | ||||||
| Oil, Gas & Consumable Fuels | 15.25% | 6.99% | — | — | — | |
| ROA, Industry | ||||||
| Energy | 14.84% | 6.84% | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
ROA = 100 × Net income (loss) attributable to Hess Corporation ÷ Total assets
= 100 × 2,096 ÷ 21,695 = 9.66%
2 Click competitor name to see calculations.
A significant volatility in profitability and asset efficiency is observed between 2018 and 2022. The company underwent a period of intensifying losses that culminated in 2020, followed by a robust recovery in both net income and return on assets through 2022.
- Net Income Trends
- Net income exhibited a downward trajectory from 2018 through 2020, with losses widening from 282 million USD to a peak deficit of 3.093 billion USD in 2020. A sharp reversal occurred in 2021, as the company returned to profitability with a net income of 559 million USD, which further accelerated to 2.096 billion USD by the end of 2022.
- Asset Base Stability
- Total assets remained relatively consistent over the five-year period, fluctuating between 18.8 billion USD and 21.8 billion USD. A notable contraction in the asset base occurred in 2020, coinciding with the period of maximum financial loss, before recovering to 21.695 billion USD in 2022.
- Return on Assets (ROA) Performance
- The ROA closely mirrored the volatility of net income. After marginal declines in 2018 and 2019, the ROA plummeted to -16.43% in 2020, indicating a severe misalignment between asset utilization and profitability. The subsequent recovery was marked by a shift to a positive 2.72% in 2021 and a substantial increase to 9.66% in 2022, reflecting a significant improvement in the efficiency of generating profits from the company's asset base.
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