Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Paying user area
Try for free
Texas Pacific Land Corp. pages available for free this week:
- Statement of Comprehensive Income
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Current Ratio since 2005
- Total Asset Turnover since 2005
- Price to Sales (P/S) since 2005
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Texas Pacific Land Corp. for $22.49.
This is a one-time payment. There is no automatic renewal.
We accept:
Economic Profit
Texas Pacific Land Corp., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2023-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The period under review demonstrates fluctuating financial performance as measured by economic profit. Net operating profit after taxes (NOPAT) experienced significant volatility, while the cost of capital remained remarkably stable. Invested capital consistently increased throughout the period, though at varying rates. Consequently, economic profit exhibited a corresponding pattern of fluctuation.
- NOPAT Trend
- Net operating profit after taxes decreased substantially from 2019 to 2020, falling from US$348,876 thousand to US$182,624 thousand. A recovery was observed in 2021, with NOPAT reaching US$267,856 thousand, followed by a substantial increase to US$444,863 thousand in 2022. However, NOPAT declined again in 2023, settling at US$389,641 thousand. This suggests sensitivity to external factors or operational changes impacting profitability.
- Cost of Capital Stability
- The cost of capital remained constant at 25.19% from 2020 through 2023, with a slight difference of 25.18% in 2019. This indicates a consistent required rate of return for investors during the analyzed timeframe, despite changes in the company’s operational performance.
- Invested Capital Growth
- Invested capital showed a consistent upward trend, increasing from US$575,173 thousand in 2019 to US$1,117,290 thousand in 2023. The rate of increase was not uniform; the largest absolute increase occurred between 2021 and 2022 (US$122,563 thousand), while the increase from 2022 to 2023 was US$276,584 thousand, indicating accelerating investment.
- Economic Profit Analysis
- Economic profit mirrored the fluctuations in NOPAT. It began at US$204,043 thousand in 2019, decreased significantly to US$42,658 thousand in 2020, and then rose to US$86,962 thousand in 2021. The peak economic profit of US$233,084 thousand was achieved in 2022, before declining to US$108,182 thousand in 2023. The correlation between NOPAT and economic profit is strong, as expected, given the consistent cost of capital and the formula used to calculate economic profit.
In summary, while invested capital consistently grew, the company’s ability to generate economic profit was subject to considerable variation, primarily driven by changes in net operating profit after taxes. The stable cost of capital provides a consistent benchmark against which to evaluate performance, but the fluctuating economic profit suggests underlying operational or market factors require further investigation.
Net Operating Profit after Taxes (NOPAT)
Texas Pacific Land Corp., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for expected credit loss.
3 Addition of increase (decrease) in unearned revenue.
4 Addition of increase (decrease) in equity equivalents to net income.
5 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income.
8 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
The financial data reveals fluctuations in profitability figures over the five-year period from 2019 to 2023. Both net income and net operating profit after taxes (NOPAT) demonstrate notable variations that suggest changes in operational performance and earnings capacity.
- Net Income (US$ in thousands)
- Net income initially decreased substantially from 318,728 in 2019 to 176,049 in 2020, indicating a significant dip in profitability. However, this was followed by a recovery in 2021, where net income rose to 269,980. The upward trend continued more strongly in 2022, reaching a peak of 446,362. In 2023, net income slightly declined to 405,645 but remained well above the levels observed in 2019 through 2021, signifying overall growth in earnings over the period.
- Net Operating Profit After Taxes (NOPAT) (US$ in thousands)
- NOPAT exhibited a similar trend to net income. It fell from 348,876 in 2019 to 182,624 in 2020, paralleling the decrease in net income and reflecting weaker operational profitability in that year. Subsequently, NOPAT rebounded to 267,856 in 2021 before surging to a high of 444,863 in 2022. In 2023, it decreased to 389,641, maintaining a level significantly above the early years of the data set. This pattern suggests that the operating efficiency and after-tax profitability improved notably after 2020, despite the slight decline in the most recent year.
In summary, the data highlight a pronounced downturn in 2020 followed by a strong recovery through 2022, with a modest decline in 2023. Both net income and NOPAT exhibit consistent directions, indicating that the changes in reported earnings are underpinned by changes in core operational performance rather than extraordinary items. The sustained improvement after 2020 suggests a positive shift in business conditions or management effectiveness that strengthened profitability during this period.
Cash Operating Taxes
Texas Pacific Land Corp., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 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).
The data reveals significant fluctuations in both income tax expense and cash operating taxes over the five-year period from 2019 to 2023.
- Income Tax Expense
- There is a notable decrease in income tax expense from 83,527 thousand US dollars in 2019 to 43,613 thousand in 2020, reflecting nearly a 48% decline. This is followed by a sharp increase to 93,037 thousand in 2021, which exceeds the 2019 level. The upward trend continues with income tax expense rising to 122,493 thousand in 2022, marking the highest value in the five-year span. In 2023, there is a moderate decline to 111,916 thousand, although this still represents a substantially higher level compared to the earlier years under review.
- Cash Operating Taxes
- Cash operating taxes show a different pattern. Initially, there is a slight decrease from 57,519 thousand in 2019 to 46,023 thousand in 2020. Subsequently, there is a significant increase to 93,269 thousand in 2021, closely paralleling the rise in income tax expense that year. The upward trajectory continues with a peak of 119,954 thousand in 2022. In 2023, cash operating taxes decline to 104,525 thousand but remain substantially elevated compared to the first two years, indicating sustained higher tax-related cash outflows in recent years.
Overall, both income tax expense and cash operating taxes exhibit a considerable dip in 2020, potentially indicative of changes in profitability or tax strategies during that period. From 2021 onwards, there is a marked upward trend resulting in significantly higher tax expenses and cash taxes through 2022, followed by slight decreases in 2023. This dynamic suggests variability in taxable income levels or tax planning outcomes that impacted the company’s tax liabilities and cash payments over these years.
Invested Capital
Texas Pacific Land Corp., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 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).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of unearned revenue.
5 Addition of equity equivalents to total equity.
6 Removal of accumulated other comprehensive income.
The financial data reveals significant trends in the company's capital structure and financing over the five-year period ending in 2023.
- Total reported debt & leases
- This metric shows a consistent decline from 2019 through 2023, decreasing from $3.367 million to $2.024 million. The decline is visible except for a slight increase in 2022 compared to 2021. Overall, the downward trend suggests the company has been reducing its reliance on debt and lease obligations over the observed period.
- Total equity
- Total equity experienced fluctuations initially, dropping from $512.1 million in 2019 to $485.2 million in 2020, but subsequently rose sharply. From 2020 onwards, equity increased markedly, reaching $1.043 billion by 2023. This upward trajectory indicates notable growth in the shareholders’ stake and possibly retained earnings or new equity infusions.
- Invested capital
- Invested capital follows a similar pattern to total equity but at a higher absolute level. It declined slightly from $575.2 million in 2019 to $555.7 million in 2020, then increased significantly in subsequent years, culminating in $1.117 billion in 2023. This increase signifies expanding investment in business assets funded through a combination of equity and debt, with the debt portion being relatively reduced.
In summary, the financial data points to a strategic reduction in debt exposure while equity and total invested capital have grown substantially. This may reflect a strengthening of the company’s financial position, with increased capitalization and potentially improved asset base, positioning it for future growth or stability.
Cost of Capital
Texas Pacific Land Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
Economic Spread Ratio
Texas Pacific Land Corp., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The economic spread ratio exhibited considerable fluctuation between 2019 and 2023. Initial values were strong, followed by a period of decline, then recovery, and a subsequent decrease. Economic profit demonstrated a similar pattern of volatility, while invested capital generally increased throughout the period.
- Economic Spread Ratio
- The economic spread ratio began at 35.47% in 2019, indicating a substantial spread between return on invested capital and the cost of capital. A significant decrease was observed in 2020, with the ratio falling to 7.68%. The ratio partially recovered in 2021, reaching 12.11%, before experiencing a substantial increase to 27.72% in 2022. However, in 2023, the ratio declined again to 9.68%, representing the second lowest value within the observed timeframe.
- Economic Profit
- Economic profit started at US$204,043 thousand in 2019. It decreased substantially to US$42,658 thousand in 2020, mirroring the decline in the economic spread ratio. A recovery occurred in 2021, with economic profit rising to US$86,962 thousand. The largest value was recorded in 2022 at US$233,084 thousand, coinciding with the peak in the economic spread ratio. In 2023, economic profit decreased to US$108,182 thousand, consistent with the reduction in the economic spread ratio.
- Invested Capital
- Invested capital showed a generally increasing trend throughout the period. It began at US$575,173 thousand in 2019 and decreased slightly to US$555,694 thousand in 2020. Subsequent years saw consistent growth, reaching US$718,143 thousand in 2021, US$840,706 thousand in 2022, and US$1,117,290 thousand in 2023. This growth in invested capital occurred alongside fluctuations in economic profit and the economic spread ratio, suggesting that increases in capital deployment did not consistently translate into proportional gains in economic profitability.
The interplay between these metrics suggests a dynamic relationship between capital allocation, profitability, and the cost of capital. The decline in the economic spread ratio in 2020 and 2023, despite increasing invested capital, warrants further investigation to understand the underlying drivers of profitability and capital efficiency.
Economic Profit Margin
Texas Pacific Land Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in unearned revenue | ||||||
| Adjusted revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 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).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
The economic profit margin exhibited considerable fluctuation between 2019 and 2023. Initial values were strong, followed by a period of volatility, and then a moderation in the most recent year. A review of the underlying components reveals insights into these shifts.
- Economic Profit Margin
- The economic profit margin began at 41.26% in 2019, representing a substantial level of economic profit relative to adjusted revenues. This figure decreased significantly to 13.70% in 2020, indicating a substantial decline in profitability. A recovery was observed in 2021, with the margin rising to 19.37%, though it remained below the 2019 level. Further improvement occurred in 2022, reaching a peak of 34.82%, the highest value in the observed period. However, the margin retreated to 16.99% in 2023, suggesting a weakening of economic profitability despite still being positive.
- Economic Profit
- Economic profit itself followed a varied trajectory. While the economic profit margin decreased in 2020, the absolute economic profit value also decreased substantially, from US$204,043 thousand in 2019 to US$42,658 thousand in 2020. Economic profit increased in 2021 to US$86,962 thousand, and then rose sharply to US$233,084 thousand in 2022. In 2023, economic profit decreased to US$108,182 thousand, mirroring the decline observed in the economic profit margin.
- Adjusted Revenues
- Adjusted revenues decreased from US$494,508 thousand in 2019 to US$311,341 thousand in 2020, coinciding with the initial drop in the economic profit margin. Revenues then increased to US$449,048 thousand in 2021 and continued to rise significantly to US$669,360 thousand in 2022. A slight decrease in adjusted revenues was noted in 2023, falling to US$636,735 thousand. The revenue increase in 2022 did not translate into a proportionally larger increase in economic profit, which may explain the lower margin in 2023 despite still substantial economic profit.
The interplay between economic profit and adjusted revenues suggests that while revenue growth can contribute to increased economic profit, it is not the sole determinant of the economic profit margin. The substantial fluctuations in the margin indicate that changes in the cost of capital or operational efficiency likely played a significant role in the observed trends.