Phillips 66 (NYSE:PSX)

The analysis of the quarterly financial metrics reveals several key trends in profitability and leverage over the examined periods.

Return on Assets (ROA)

ROA data begins from the first quarter of 2016. Initially, there is a declining trend from 8.7% in Q1 2016 down to 3.01% by Q1 2017, reflecting decreasing efficiency in asset utilization. From Q2 2017 onward, ROA shows an upward trajectory, reaching a peak of 11.73% at the end of 2018, indicating improved operational performance and better asset efficiency during this period. However, starting in 2019, ROA gradually decreases again, falling to 5.24% by Q4 2019, suggesting deteriorating asset returns in the latest quarters.

Financial Leverage

Financial leverage remains relatively stable throughout the full period, fluctuating slightly around a ratio of approximately 2.2 to 2.4. Starting at 2.26 in Q1 2015, it exhibits minor quarterly variations but no strong upward or downward trend. The leverage peaked near 2.43 in Q2 2018 and remains close to that level through 2019. This stability indicates consistent use of debt relative to equity over time without significant shifts in capital structure risk.

Return on Equity (ROE)

The ROE pattern mirrors the ROA trend but with greater volatility and magnitude. Starting from 18.3% in Q1 2016, there is a continuous decline through Q4 2016 to a low of 6.95% in Q1 2017. Subsequently, ROE climbs sharply to a high of 28.1% in Q4 2018, signaling increased profitability for shareholders during this period. Nonetheless, ROE declines in 2019, dropping to 12.35% by Q4, indicating weakening shareholder returns in recent quarters.

Overall, the company experienced a period of declining profitability through 2016 and early 2017, followed by a strong recovery and growth in returns through 2018. The financial leverage remained relatively constant, providing a stable capital structure. However, profitability metrics show a downtrend again in 2019, which may warrant further investigation into operational challenges or market conditions impacting returns.

Net Profit Margin

The net profit margin displays a trend of initial increase followed by fluctuations in the subsequent periods. Beginning with a value of 4.27% in March 2016, it slightly declined and remained around the 1.85% to 2.16% range throughout 2016 and 2017. A noticeable rise occurred in 2018, with margins increasing to a high of 5.85% in December 2018. Afterward, a gradual decline is observed throughout 2019, ending at 2.87% by December 2019. This pattern suggests periods of improved profitability in 2018 followed by a reduction in efficiency or profitability factors in 2019.

Asset Turnover

Asset turnover ratios indicate the efficiency in utilizing assets to generate sales. From March 2016 to December 2016, the ratio declined steadily from 2.04 to 1.63, signifying reduced asset efficiency. However, from early 2017, there is a gradual recovery with ratios improving and stabilizing slightly above 1.8 through 2017 and 2018, peaking at 2.05 in March 2019. Toward the end of 2019, the asset turnover ratio slightly decreased again to 1.83, indicating minor declines in asset utilization efficiency.

Financial Leverage

Financial leverage remained relatively stable with minor fluctuations over the entire period. Starting from 2.26 in March 2015, it experienced small variations mostly between 2.1 and 2.43. A mild upward trend is observed during 2017 and 2018, reaching 2.43 in June 2018, followed by a slight decrease towards the end of 2018 and stabilization around 2.36 in 2019. This stability suggests consistent use of debt relative to equity during this period, without significant changes in the company’s capital structure.

Return on Equity (ROE)

Return on equity shows considerable variability with a marked peak and subsequent decline. Beginning at 18.3% in March 2016, ROE dropped to a low of 6.95% by December 2016. It then progressively improved through 2017 and 2018, reaching a maximum of 28.1% in December 2018. However, 2019 saw a decreasing trend, with ROE declining steadily to 12.35% in December 2019. This pattern reflects changes in profitability and financial management effectiveness, peaking in late 2018 before encountering challenges that reduced equity returns in 2019.

The analyzed financial data reveals several key trends and changes over the reported periods. The Tax Burden ratio demonstrates relative stability between 0.7 and 0.8 from 2015 through 2017, followed by a notable spike reaching values between 1.33 and 1.54 in early 2018. Subsequently, it returns closer to prior levels around 0.78 to 0.8 through 2019, indicating some fluctuations in tax-related impacts within the company's profitability measures.

Interest Burden ratios exhibit minor fluctuations within a narrow band of approximately 0.86 to 0.95 across all periods. A general slight decrease is observable from 2015 to 2017, stabilized around 0.87 to 0.9, with a mild increase toward 0.93 in late 2018 and 2019. This points to relatively consistent management of interest expenses relative to earnings before interest and taxes.

The EBIT Margin percentage shows a declining trend from 6.37% in early 2015 down to 2.9% by the first quarter of 2016, maintaining slightly higher but still subdued values thereafter through 2017. Beginning in 2018, the margin improves steadily, peaking at 6.88% early in 2019, then contracting again to 4.04% by the end of 2019. These movements suggest variability in operational profitability, influenced perhaps by market conditions or cost structures.

Asset Turnover ratios decrease from 2.04 in early 2015 to a low of 1.63 in early 2016, followed by a gradual recovery peaking slightly above 2.05 in early 2018. This metric then drifts downward again approaching 1.83 by the end of 2019, indicating fluctuations in the efficiency with which assets generate revenue over time.

Financial Leverage remains fairly steady with ratios mostly between 2.1 and 2.4 throughout the entire timeframe. Minor variations do not suggest significant alterations in the company's use of debt relative to equity during the periods examined.

Return on Equity (ROE) experiences an initial decline from 18.3% in early 2015 to a low near 6.95% by early 2016, then stabilizes around 7% to 9% until late 2017. A pronounced upward trend follows in 2018, peaking at 28.1%, before reducing again toward 12.35% at end-2019. This pattern indicates variations in the company's overall profitability and effectiveness in generating returns for shareholders, with notable improvement phases and periods of contraction.

Tax Burden

Relatively stable near 0.7–0.8, sharp increase in early 2018, return to prior levels by 2019.

Interest Burden

Stable, minor fluctuations between 0.86 and 0.95, with slight increases toward 2019.

EBIT Margin

Decline from 6.37% to below 3%, recovery to above 6% in early 2019, followed by contraction.

Asset Turnover

Decline from over 2.0 to 1.63, gradual recovery to just over 2.0, then decline back near 1.83.

Financial Leverage

Consistent between 2.1 and 2.4, indicating stable capital structure.

Return on Equity (ROE)

Decreased to 6.95% early 2016, stable baseline, sharp rise to over 28% in 2018, followed by decline to around 12% by 2019.

Net Profit Margin

The net profit margin data begins from March 31, 2016. Initial values indicate a margin of 4.27%, which declines progressively to 1.85% by March 31, 2017. From that point, there is a recovery trend with the margin increasing steadily, reaching a peak at 5.85% in December 31, 2018. Subsequently, the margin shows a gradual but consistent decline through 2019, ending at 2.87% in December 31, 2019. Overall, the margin exhibits a cyclical behavior with a trough in early 2017, a peak in late 2018, and weakening profitability by the end of 2019.

Asset Turnover

Asset turnover ratios are reported starting March 31, 2016, generally displaying values just above 1.6 at the beginning of the series. There is a gradual improvement over the first three years, peaking at 2.05 in March 31, 2019. Towards the latter part of 2019, the ratio declines moderately, stabilizing near 1.83 by year-end. The trend suggests fluctuating efficiency in asset utilization, with an overall moderate upward movement through 2018 and early 2019 followed by slight reductions.

Return on Assets (ROA)

Return on assets, starting at 8.7% for March 31, 2016, undergoes a notable decline reaching a low of 3.01% by December 31, 2016. An upward recovery phase follows, with ROA increasing significantly to a high of 11.73% at December 31, 2018. From this peak, ROA decreases steadily across 2019, finishing at 5.24% by the end of the year. This indicates periods of both declining and improving asset profitability, with the highest efficiency noted in late 2018 before a downturn in 2019.

Tax Burden

The tax burden ratio shows a relatively stable pattern from 2015 through early 2017, fluctuating slightly around 0.7 to 0.75. However, beginning in 2017, particularly in the first quarter, there is a notable spike above 1.3, peaking around 1.54, indicating a possible anomaly or unusual tax event. After this spike, the ratio declines and stabilizes near 0.78 to 0.8 during 2019, suggesting a return to more typical tax expense levels relative to pre-tax income.

Interest Burden

The interest burden ratio exhibits a gradual decline from 0.95 in early 2015 to around 0.86 by the end of 2016, indicating a slight increase in interest expenses relative to EBIT over this period. From 2017 through 2019, the ratio stabilizes mostly around 0.89 to 0.93, implying consistent interest cost relative to earnings before interest and taxes over these years.

EBIT Margin

The EBIT margin declines from roughly 6.37% in the first quarter of 2015 down to a low of 2.9% by early 2016, then oscillates modestly between 2.95% and 4.83% through 2018. In 2019, the margin reaches a peak of 6.88% but subsequently falls back to approximately 4.04% by the final quarter. This indicates a period of compressing profitability followed by some recovery and then another downturn towards the end of the period.

Asset Turnover

Asset turnover steadily declines from 2.04 in early 2015 to 1.63 by late 2015, characterizing decreasing efficiency in using assets to generate revenue during that phase. Thereafter, the ratio recovers gradually, rising back above 2.0 by late 2018. However, the ratio dips again in 2019 to around 1.83, reflecting a minor erosion in asset utilization efficiency during the most recent period.

Return on Assets (ROA)

ROA decreases substantially from 8.7% in early 2015 to a low near 3.01% by early 2016, mirroring the declines observed in EBIT margin and asset turnover. From 2017 to 2018, ROA rebounds strongly, peaking at approximately 11.73%, indicating improved overall asset profitability. In 2019, however, ROA trends downward once more to near 5.24%, signaling reduced returns on assets amid less favorable earnings conditions.

Tax Burden

The tax burden ratio displays moderate fluctuations over the observed periods. Starting from a baseline of approximately 0.71 in early 2016, it slightly increased to a range around 0.74 to 0.75 in 2017. A significant spike occurs in early 2018, with the ratio rising sharply to values exceeding 1.3 and peaking near 1.54, indicating an unusual increase in tax expense relative to taxable income during this interval. After this peak, the ratio declines in 2019, stabilizing around 0.78 to 0.80.

Interest Burden

The interest burden ratio shows a gradual decline from 0.95 in early 2016 to a lower range near 0.86 by the end of 2016, suggesting increased interest expenses or lower EBIT relative to earnings before interest and taxes. From 2017 onward, the ratio slightly recovers and stabilizes around 0.89 to 0.93 through 2019, representing relatively consistent interest costs over these periods.

EBIT Margin

The EBIT margin exhibits a general declining trend during 2015 and 2016, falling from about 6.37% in early 2015 to under 3.0% by early 2017. From 2017 to 2018, a recovery phase is evident as margins rise steadily, reaching a peak of nearly 6.88% in early 2019. However, a subsequent drop occurs toward the end of 2019, with margins declining to approximately 4.04%. This pattern suggests volatility with periods of both erosion and improvement in operating profitability.

Net Profit Margin

The net profit margin follows a broadly similar trend to EBIT margin but at lower levels, starting near 4.27% in early 2015 and decreasing to around 1.85% by early 2017, indicating diminishing bottom-line profitability during this phase. Thereafter, from 2017 through early 2019, there is noticeable growth, with margins increasing to a peak of about 5.85%. A decline is observed in the latter part of 2019, with the margin reducing to approximately 2.87%. This pattern may reflect changes in operational efficiency, tax impacts, and interest expenses affecting net profitability.