Amazon.com Inc. (NASDAQ:AMZN)

The financial data reveals several notable trends from 2020 through 2024. There are fluctuations evident in key profitability and capital metrics, suggesting periods of both strong performance and significant challenges.

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibited substantial variability over the observed period. It increased significantly from 24,183 million USD in 2020 to a peak of 37,525 million USD in 2021. However, a sharp decline occurred in 2022, where NOPAT turned negative to -5,619 million USD, indicating an operational loss that year. Recovery followed in 2023, with NOPAT rising back to 31,856 million USD and further improving to 58,988 million USD in 2024, surpassing prior peak levels.

Cost of Capital

The cost of capital showed a slight decreasing trend from 15.5% in 2020 to 14.66% in 2022 but increased again in subsequent years, reaching 15.61% by 2024. This fluctuation suggests changes in the risk profile or market conditions impacting the company’s capital costs, but overall it remained in a narrow range around 15%.

Invested Capital

Invested capital saw continuous and steady growth, expanding from 150,160 million USD in 2020 to 375,421 million USD in 2024. This near 2.5-fold increase reflects significant reinvestment or expansion initiatives undertaken by the company, potentially in assets, operations, or both.

Economic Profit

Economic profit demonstrated a highly volatile pattern. It rose from a modest 907 million USD in 2020 to 6,626 million USD in 2021, indicating value creation above the cost of capital. The situation reversed dramatically in 2022 and 2023, with substantial negative economic profits of -45,112 million USD and -18,121 million USD respectively, emphasizing value destruction likely linked to the operational losses recorded. By 2024, economic profit returned to slightly positive territory at 399 million USD, suggesting a recovery but with marginal value creation relative to capital employed.

Overall, the data suggests a company experiencing rapid growth in invested capital while encountering serious operational and economic profit challenges during the 2022-2023 period. The recovery indicated in 2024 is significant but reflects a cautious return to value creation rather than a sustained upward trend. Meanwhile, the relative stability of the cost of capital implies that external financing conditions remained relatively steady despite internal profit fluctuations.

Net Income (Loss)

The net income fluctuated significantly over the five-year period. Beginning at $21,331 million in 2020, there was a substantial increase to $33,364 million in 2021. However, 2022 marked a notable downturn with a net loss of $2,722 million. This negative performance rebounded sharply in the subsequent years, reaching $30,425 million in 2023 and further rising to $59,248 million in 2024. The data indicates a strong recovery and growth trajectory after the loss experienced in 2022.

Net Operating Profit After Taxes (NOPAT)

NOPAT followed a similar pattern to net income, starting at $24,183 million in 2020 and rising to $37,525 million in 2021. It then experienced a sharp decline to a negative $5,619 million in 2022, deeper than the net income loss in the same year, indicating challenges in operating profitability. However, a significant recovery occurred in 2023 with NOPAT increasing to $31,856 million, followed by a strong increase to $58,988 million in 2024. This suggests an improvement in the company's core operational efficiency and profitability in the last two years.

Overall Analysis

The financial results reveal volatility, with a peak in 2021, a pronounced downturn in 2022, and substantial recovery and growth by 2024. The presence of negative figures in 2022 for both net income and NOPAT indicates operational and profitability challenges during that year. The subsequent rebound in 2023 and 2024 demonstrates strong adaptive or strategic measures resulting in enhanced earnings and operating profit, achieving new highs at the end of the evaluated period.

Provision (benefit) for income taxes, net

The net provision for income taxes showed considerable volatility over the observed periods. In 2020 and 2021, the provision increased significantly from 2,863 million USD to 4,791 million USD. However, the year 2022 presented an unusual pattern with a net tax benefit of -3,217 million USD, indicating a reversal or tax benefit situation rather than a conventional tax expense. Subsequently, the provision rose again sharply to 7,120 million USD in 2023 and further to 9,265 million USD in 2024, reflecting a substantial increase in tax obligations or adjustments during these years.

Cash operating taxes

Cash operating taxes exhibited a steadily increasing trend from 3,844 million USD in 2020 to 5,646 million USD in 2021, followed by a more moderate rise to 5,689 million USD in 2022. In 2023, there was a notable surge to 13,583 million USD, nearly doubling the previous year's amount. This upward momentum continued in 2024 with cash operating taxes reaching 14,023 million USD. The substantial increase observed in the last two years suggests significant growth in actual tax payments, potentially correlated with rising taxable income or changes in tax rates and regulations.

Total reported debt & leases

Over the five-year period, total reported debt and leases exhibited an overall increasing trend from 100,504 million US dollars in 2020 to a peak of 154,972 million in 2022. This increase suggests a significant rise in the company's leverage or obligations during these years. However, this peak level of debt was relatively maintained in 2023, with a slight decrease to 154,556 million, followed by a further moderate reduction to 147,838 million in 2024. The slight decline in the last two years might indicate strategic deleveraging or improved debt management efforts.

Stockholders’ equity

Stockholders' equity demonstrated strong and consistent growth throughout the period under review. Starting at 93,404 million US dollars in 2020, equity levels increased markedly year over year, reaching 138,245 million in 2021 and continuing upward to 146,043 million in 2022. This growth accelerated significantly during 2023 and 2024, culminating in a sizable equity base of 285,970 million by the end of 2024. The substantial rise in equity in the final years suggests enhanced retained earnings, possible equity issuances, or asset revaluations, which strengthen the company's net asset position and financial stability.

Invested capital

Invested capital showed a continuous and pronounced increase across the five years. Beginning at 150,160 million US dollars in 2020, it increased substantially to 202,836 million in 2021, then accelerated its upward trajectory to 269,358 million in 2022. The growth sustained momentum through 2023 and 2024, reaching 326,668 million and 375,421 million respectively. This pattern indicates significant expansion in the company's total capital employed in operations, possibly due to investments in long-term assets, acquisitions, or business growth initiatives.

Economic Profit

Economic profit exhibited significant volatility over the observed period. It started positively in 2020 with 907 million US dollars and increased substantially to 6,626 million US dollars in 2021. However, a sharp decline occurred in 2022, turning the economic profit negative at -45,112 million US dollars. This negative trend persisted into 2023 with a reduction in losses to -18,121 million US dollars, and by 2024 it returned to a marginal positive figure of 399 million US dollars. The pattern suggests periods of considerable operational or investment challenges followed by efforts to recover profitability.

Invested Capital

Invested capital showed a consistent upward trend throughout the period. It increased from 150,160 million US dollars in 2020 to 375,421 million US dollars in 2024, reflecting a significant expansion in the capital base. This more than doubling of invested capital indicates large-scale investments or acquisitions leading to a growing asset base over the years.

Economic Spread Ratio

The economic spread ratio followed a largely similar volatile trend as economic profit. Starting at 0.6% in 2020, the ratio rose to a peak of 3.27% in 2021, indicating improved returns on invested capital. However, in 2022, the spread sharply turned negative to -16.75%, followed by a partial recovery to -5.55% in 2023. By 2024, it had normalized close to zero at 0.11%, implying nearly breakeven returns relative to the cost of capital. This trend highlights periods of considerable underperformance followed by a gradual return to stabilization.

Adjusted Net Sales

The adjusted net sales demonstrate a consistent upward trend over the five-year period. Beginning at $387,482 million in 2020, sales increased each year, reaching $641,635 million in 2024. This steady growth indicates strong revenue expansion and market demand over time.

Economic Profit

The economic profit shows significant volatility across the observed years. Initially, there was a positive economic profit of $907 million in 2020, followed by a substantial increase to $6,626 million in 2021. However, this positive trajectory reversed sharply in 2022 with a large negative economic profit of -$45,112 million, improving somewhat in 2023 to -$18,121 million, and returning to a small positive level of $399 million in 2024. This pattern suggests significant challenges impacting profitability after 2021, but with signs of recovery by 2024.

Economic Profit Margin

The economic profit margin mirrors the trends observed in economic profit. It increased from 0.23% in 2020 to 1.4% in 2021, reflecting improved profitability relative to sales. Following this peak, there was a drastic decline to -8.74% in 2022, indicating losses exceeding sales growth. The margin improved to -3.13% in 2023 and further moved to a near break-even point at 0.06% in 2024. This cycle highlights a period of margin compression and loss, with performance stabilizing by the end of the period.

Overall Observations

Despite continuous growth in net sales throughout the period, economic profit and margin experienced significant downturns starting in 2022. This divergence suggests that increasing revenues were not sufficient to offset costs or capital charges, leading to negative economic returns during those years. The improvement seen in 2023 and 2024 indicates a strategic or operational adjustment contributing to a return toward profitability.