Costco Wholesale Corp. (NASDAQ:COST)

The financial data demonstrates several notable trends over the specified periods, reflecting changes in profitability, capital structure, and overall economic performance.

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibited a general upward trend from 2020 to 2025, increasing from $4,254 million to $7,834 million. Notably, there was a slight dip in 2023 to $5,694 million from $6,421 million in 2022, before rising sharply again in the subsequent years. This suggests variability in operating profitability, although the overall trajectory is positive, indicating effective operations and possibly improved margins or revenue growth over time.

Cost of Capital

The cost of capital showed a gradual increase from 12.21% in 2020 to 12.7% in 2024, where it then stabilized through 2025. This increment reflects a rising expense to finance the invested capital, which could be influenced by factors such as changes in market interest rates or shifts in the company’s risk profile.

Invested Capital

Invested capital experienced fluctuations over the years, initially decreasing slightly from $29,043 million in 2020 to $28,508 million in 2021 before increasing to $31,671 million in 2022 and peaking at $34,903 million in 2023. Following this peak, a decline to $32,993 million occurred in 2024, but the figure rose again substantially to $37,996 million in 2025. These fluctuations indicate varying levels of investment or asset base changes, potentially influenced by capital expenditure, acquisitions, or asset dispositions.

Economic Profit

Economic profit, which measures value creation above the cost of capital, exhibited a strong positive trend, growing from $708 million in 2020 to $3,009 million in 2025. There was a considerable increase in 2021 and 2022 to $1,775 million and $2,484 million, respectively, followed by a decline to $1,319 million in 2023, which parallels the dip observed in NOPAT. Afterwards, economic profit surged again, reaching the highest levels in 2024 and 2025. This pattern suggests the company has increasingly generated returns exceeding its capital costs, indicating value creation despite some year-to-year variability.

Overall, the financial indicators reveal a predominantly positive performance trend with growing profitability and economic profit, coupled with a slightly increasing cost of capital and fluctuating invested capital levels. The temporary dips in 2023 highlight some short-term challenges, but recovery and growth in subsequent periods underscore resilience and effective capital utilization.

Net Income Attributable to Costco

The net income showed a consistent upward trend over the six-year period. Starting at 4,002 million USD, it increased steadily each year, reaching 8,099 million USD in the latest period. The largest year-over-year growth appeared from the 2023 to 2024 period, with an increase of approximately 1,075 million USD. Overall, net income approximately doubled from the first to the last reported year, reflecting strong profitability growth.

Net Operating Profit After Taxes (NOPAT)

NOPAT followed a generally increasing pattern as well, starting at 4,254 million USD in the earliest period and rising to 7,834 million USD in the most recent year. There was a slight deviation from the upward trend between 2022 and 2023, where NOPAT decreased from 6,421 million USD to 5,694 million USD before resuming growth. The recovery that followed saw a notable increase to 7,032 million USD and then to 7,834 million USD. This suggests a temporary operational challenge was overcome, leading to renewed profitability improvements.

General Observations

Both net income and NOPAT exhibited significant growth over the examined period, reinforcing a positive operational and financial trajectory. The temporary dip in NOPAT suggests some operational or cost-related challenges in the 2023 fiscal year, yet the strong rebound indicates effective management response or favorable market conditions. The steadier growth in net income compared to the fluctuating pattern of NOPAT could suggest impacts of non-operating factors or variations in tax effects during the period.

The financial data indicates a consistent upward trend in both the provision for income taxes and cash operating taxes over the analyzed period. This upward trajectory suggests increasing profitability or taxable income, requiring higher tax allocations.

Provision for Income Taxes

The provision for income taxes has increased from $1,308 million in 2020 to $2,719 million in 2025. This steady growth reflects a compounded annual increase, highlighting the company's growing tax liability over the years. The year-over-year increases range between approximately 17% to 24%, showing sustained expansion without volatility.

Cash Operating Taxes

Cash operating taxes also show a consistent rise from $1,246 million in 2020 to $2,750 million in 2025. Notably, cash operating taxes slightly exceed the provision for income taxes, which could indicate timing differences or tax payment strategies. The year-over-year growth in cash operational taxes aligns closely with the provision, reinforcing the narrative of increased cash outflows related to tax expenses.

Overall, the data reveals a parallel and proportionate increase in tax provisioning and payments, reflecting robust business performance and likely higher earnings. The absence of any decline or irregularity in these amounts suggests stable tax management and continuous financial growth throughout the period under review.

Total reported debt & leases

The total reported debt and leases exhibit a generally declining trend over the observed periods. Starting from approximately $11.1 billion, the amount slightly increased to around $11.4 billion in the second year, then consistently decreased in the subsequent years, reaching approximately $9.9 billion in the latest period. This suggests a gradual reduction in leverage or obligations related to debt and leases over time.

Total Costco stockholders’ equity

Stockholders' equity demonstrates significant growth across the years. There is an initial slight decline from about $18.3 billion to $17.6 billion, followed by a substantial increase to over $20.6 billion in the third period. This upward trajectory continues more markedly in the following years, reaching nearly $29.2 billion in the most recent period. The growth in equity indicates strengthening financial stability and retained earnings accumulation.

Invested capital

Invested capital shows a consistent upward trend, rising from approximately $29.0 billion at the beginning of the period to nearly $38.0 billion in the latest year. Despite a slight dip in one of the middle years, the general movement is positive, suggesting ongoing investment in the company's operations and assets. This increase in invested capital aligns with the growth observed in stockholders’ equity, reflecting expansion and reinvestment activities.

Economic Profit

The economic profit demonstrates a generally upward trajectory over the analyzed periods, with an initial value of 708 million in 2020, rising significantly to 1775 million in 2021 and further to 2484 million in 2022. Despite a notable decrease to 1319 million in 2023, the figure rebounds strongly, reaching 2843 million in 2024 and 3009 million in 2025. This trend indicates substantial overall growth with a temporary dip in the middle period.

Invested Capital

Invested capital shows a consistent increase with slight fluctuations. Starting at 29,043 million in 2020, it slightly decreases to 28,508 million in 2021, then increases gradually to 31,671 million in 2022 and 34,903 million in 2023. There is a minor reduction to 32,993 million in 2024, followed by a significant rise to 37,996 million in 2025. The pattern reflects a general expansion in capital investment with some short-term variability.

Economic Spread Ratio

The economic spread ratio exhibits notable variability throughout the periods. It begins at 2.44% in 2020 and increases markedly to 6.23% in 2021 and 7.84% in 2022. This is followed by a decline to 3.78% in 2023, then a sharp increase to 8.62% in 2024 and a slight decrease to 7.92% in 2025. Overall, this ratio reflects fluctuations in the company’s return relative to its cost of capital, with peaks in the later years suggesting improved economic value creation.

Summary and Insights

The economic profit and economic spread ratio generally correlate, both showing peaks in 2022, a dip in 2023, and recovery with strong performance in 2024 and 2025. The invested capital steadily increases, implying ongoing investments aimed at growth. The temporary decline in economic profit and spread ratio in 2023 may indicate a period of reduced operational efficiency or higher costs, yet the subsequent recovery suggests the company managed to enhance value creation thereafter. This pattern reflects a solid economic performance with resilience to short-term challenges.

The financial data over the six-year period reveals several notable trends in key performance indicators. Both the absolute and relative profitability metrics demonstrate fluctuations that are important to highlight.

Net Sales

Net sales have shown a consistent upward trajectory throughout the observed periods. Starting from approximately 163.2 billion USD in 2020, net sales increased each subsequent year, reaching close to 269.9 billion USD by 2025. This steady growth reflects a robust expansion in revenue generation over the timeframe.

Economic Profit

Economic profit exhibits a more variable pattern compared to net sales. Beginning at 708 million USD in 2020, it rose significantly to 1.775 billion USD in 2021, and further to 2.484 billion USD in 2022. However, in 2023, economic profit declined sharply to 1.319 billion USD before rebounding to higher levels in 2024 and 2025, with values of 2.843 billion USD and 3.009 billion USD respectively. Despite this mid-period dip, the overall trend is positive with economic profit more than quadrupling from 2020 to 2025.

Economic Profit Margin

The economic profit margin, representing economic profit as a percentage of net sales, generally follows the fluctuations in economic profit but at a lower and more variable range. The margin starts at 0.43% in 2020, nearly doubles to 0.92% in 2021, and peaks at 1.12% in 2022. A decline to 0.55% occurs in 2023, before recovering and stabilizing around 1.14% in 2024 and slightly decreasing to 1.11% in 2025. This pattern indicates that despite increases in both sales and absolute economic profit, the company experienced a period of reduced profit efficiency relative to net sales in 2023, followed by recovery.

Overall, the data indicates strong growth in sales revenue accompanied by generally increasing economic profit, albeit with some volatility in both absolute profit and profit margin during the mid-period. The recovery and subsequent improvement in economic profit and margin after 2023 suggest the company was able to enhance profitability and operational efficiency following the dip observed in that year.