Applied Materials Inc. (NASDAQ:AMAT)

The financial data reflects several notable trends over the periods analyzed. Net operating profit after taxes (NOPAT) exhibited a general upward trend from 2019 to 2022, increasing steadily from $2,934 million to a peak of $6,900 million. However, in the subsequent years of 2023 and 2024, NOPAT declined slightly to $6,533 million and $6,363 million respectively, indicating a potential stabilization or minor contraction in operating profitability.

Regarding the cost of capital, the percentage values have remained relatively stable around the 20% mark, with a slight increase from 19.4% in 2019 to a peak of 20.55% in 2023, followed by a minor decrease to 20.45% in 2024. This suggests consistent expectations of return by capital providers, with only small fluctuations over the years.

Invested capital showed a continuous and significant increase throughout the period, growing from $10,129 million in 2019 to $22,135 million in 2024. This indicates substantial ongoing investments or capital employed in the business, more than doubling over the six-year span, which may imply aggressive expansion or reinvestment strategies.

For economic profit, a measure reflecting value creation over the cost of capital, the data shows considerable growth from $970 million in 2019 to a peak of $3,888 million in 2022. However, there is a marked decline in the subsequent years to $2,880 million in 2023 and further down to $1,836 million in 2024. This trend suggests that while economic profit improved significantly during the initial years, the ability to generate returns above the cost of capital has weakened recently despite rising invested capital.

Summary of Trends

- Strong growth in net operating profit after taxes until 2022, followed by a slight decrease.

- Stable cost of capital around 20%, signaling consistent investor return requirements.

- Continuous and sizeable increase in invested capital reflecting expanding capital deployment.

- Economic profit growth peaked in 2022 but declined notably afterward, indicating diminishing returns relative to capital costs.

Overall, the data points to an initial phase of profitable growth and value creation, which appears to have slowed or reversed in recent years as increasing investments have not been matched by proportional increases in profit. This dynamic warrants attention to efficiency in capital utilization and future profitability trends.

The financial data reveals a general upward trend in the company's profitability over the years under review.

Net Income

Net income has shown consistent growth from 2019 through 2024. Starting at 2,706 million US dollars in 2019, it increased steadily each year to reach 7,177 million US dollars in 2024. This represents a more than doubling of net income over the six-year period, indicating strong financial performance and effective management of expenses relative to revenue.

Net Operating Profit After Taxes (NOPAT)

NOPAT also exhibited growth from 2019 through 2022, increasing from 2,934 million US dollars to 6,900 million US dollars, which reflects improvements in operating efficiency and tax management. However, there is a slight downward trend observed in the last two years, decreasing to 6,533 million in 2023 and further to 6,363 million in 2024. This suggests a potential reduction in operational efficiency or changes in tax impacts during the most recent period.

Comparing net income and NOPAT trends, it is evident that while net income maintains a robust growth path, NOPAT has begun to stabilize and slightly decline. This may indicate increased financial activities or non-operating gains contributing to net income, or possible changes in operational conditions needing further investigation.

Provision for Income Taxes

The provision for income taxes shows a general upward trend over the six-year period. Starting at $563 million in 2019, it slightly decreased to $547 million in 2020 but then increased substantially to $883 million in 2021. This upward trajectory continued with provisions of $1,074 million in 2022. A decrease occurred in 2023, with the provision falling to $860 million, followed by a rebound to $975 million in 2024. These fluctuations suggest variability in taxable income or changes in tax rates or regulations impacting the tax provision.

Cash Operating Taxes

Cash operating taxes show a consistent and pronounced increase throughout the period. Beginning at $563 million in 2019, cash taxes slightly decreased to $530 million in 2020 but then rose steadily each subsequent year: $868 million in 2021, $920 million in 2022, followed by a more marked increase to $1,215 million in 2023, and reaching $1,606 million in 2024. This substantial increase in cash taxes paid indicates growing tax liabilities settled in cash, which may reflect higher taxable income or changes in tax payment schedules and cash flow management.

Comparative Analysis

The provision for income taxes and cash operating taxes follow somewhat similar trends with both increasing from 2020 onwards, though the cash taxes show a more aggressive increase from 2022 to 2024. Notably, cash operating taxes exceeded the provision for income taxes from 2023 onwards, implying potential timing differences between accrued tax expenses and actual tax payments or adjustments such as payment of prior year liabilities or changes in deferred tax balances.

The financial data reveals several notable trends over the six-year period. Total reported debt and leases increased steadily from 5,464 million US dollars in 2019 to 6,605 million US dollars in 2024. This represents a moderate but consistent growth in the company's financial obligations, suggesting an ongoing strategy involving increased leverage or financing through debt instruments.

Stockholders’ equity exhibited significant growth, rising from 8,214 million US dollars in 2019 to 19,001 million US dollars in 2024. This increase reflects a strengthening equity base, which may be attributed to retained earnings, new equity issuances, or asset revaluation. The growth in equity outpaces the growth in reported debt, indicating an overall improvement in the company’s financial position from an equity perspective.

Invested capital also demonstrated a rising trend, growing from 10,129 million US dollars in 2019 to 22,135 million US dollars in 2024. This metric encompasses both equity and debt financing, and its increase corresponds with the observed growth in both debt and equity. The substantial growth in invested capital suggests increased investment in company assets, potentially aimed at supporting expansion or enhancing operational capacity.

Overall, the data indicates a company that is incrementally increasing its financial leverage while simultaneously enhancing its equity base and investing more capital into the business. This balanced growth in debt and equity, coupled with the substantial rise in invested capital, may imply strategic investments geared toward long-term growth objectives.

Economic Profit

The economic profit exhibited a general upward trend from 2019 to 2022, increasing from 970 million US dollars to a peak of 3,888 million US dollars. However, subsequent periods showed a decline, with economic profit falling to 2,880 million in 2023 and further dropping to 1,836 million in 2024. This pattern suggests that while profitability improved significantly in the earlier years, the last two years experienced a notable contraction.

Invested Capital

Invested capital consistently increased throughout the period under review. Starting at 10,129 million US dollars in 2019, it rose steadily each year, reaching 22,135 million by 2024. The steady growth in invested capital indicates ongoing investments and expansion in the company’s asset base, which nearly doubled over the six-year span.

Economic Spread Ratio

The economic spread ratio demonstrated a fluctuating trend. Initially stable around 9.5% to 10% in 2019 and 2020, it sharply increased to above 21% in 2021, peaking at 26.11% in 2022. After this peak, the spread ratio decreased significantly to 16.2% in 2023 and further dropped to 8.3% in 2024, approaching the levels seen at the beginning of the period. This fluctuation suggests a notable improvement in the return on invested capital relative to cost of capital through 2022, followed by a weakening in the last two years.

Overall Insights

The data indicates that the company experienced a period of strong economic performance leading up to 2022, characterized by rising economic profit, invested capital, and a higher economic spread ratio. The subsequent decline in economic profit and economic spread ratio in 2023 and 2024, despite the continued increase in invested capital, may imply diminishing returns on new investments or increased costs affecting profitability. These trends point to a potential need for strategic reassessment regarding capital allocation and operational efficiency.

Economic Profit

The economic profit exhibited a significant upward trend from 2019 to 2022, increasing from 970 million US dollars in 2019 to a peak of 3,888 million US dollars in 2022. However, this peak was followed by a notable decline: the economic profit decreased to 2,880 million US dollars in 2023 and further dropped to 1,836 million US dollars by 2024. The initial growth phase suggests enhanced operational efficiency or profitability, while the recent decline indicates potential challenges impacting economic value generation.

Net Revenue

Net revenue consistently increased each year over the observed period. Starting from 14,608 million US dollars in 2019, it rose steadily to reach 27,176 million US dollars by 2024. This continuous revenue growth reflects expansion in sales, market share, or pricing power, indicating robust topline performance despite fluctuations in economic profit.

Economic Profit Margin

The economic profit margin followed a pattern similar to that of economic profit. It increased from 6.64% in 2019 to a high of 15.08% in 2022, indicating improved profitability relative to net revenue. Following the peak, the margin declined to 10.86% in 2023 and further down to 6.76% in 2024. This decline signals decreasing profitability efficiency despite growing revenue, suggesting rising costs or diminishing returns impacting the margin.

Overall, the data highlights a period of growth and improved profitability culminating in 2022, succeeded by a downward trend in economic profit and margins while net revenue continued to grow steadily. This divergence points to potential issues in cost management or market conditions affecting profitability despite ongoing revenue gains.