Costco Wholesale Corp. (NASDAQ:COST)

The financial data indicates notable trends regarding profitability, capital investment, and economic value generation over the observed periods.

Net Operating Profit After Taxes (NOPAT)

The NOPAT demonstrates a generally increasing trend, rising from 4,254 million US dollars in the earliest period to 7,834 million US dollars by the last period. There is a consistent increase from 2020 through 2022, followed by a slight decline in 2023, before an upward recovery and subsequent growth in the final two periods.

Cost of Capital

The cost of capital exhibits a gradual increase over the periods under review, moving from 12.19% in 2020 to a peak of 12.68% in 2025. This steady rise suggests a modest increase in the expense associated with capital funding.

Invested Capital

Invested capital values reveal fluctuations with an initial decrease from 29,043 million US dollars in 2020 to 28,508 million US dollars in 2021, followed by a significant increase to 34,903 million US dollars by 2023. Subsequently, there is a decline in 2024, before reaching the highest value of 37,996 million US dollars in 2025. Overall, there is a positive trend indicating increasing capital deployment, despite some variability.

Economic Profit

Economic profit experiences a substantial increase throughout the periods, beginning at 715 million US dollars in 2020 and rising to 3,018 million US dollars in 2025. While there is a marked dip in 2023 compared to 2022, the economic profit rebounds strongly thereafter, reaching new highs. This suggests that the company has been increasingly successful in generating returns above the cost of capital.

In summary, the data reflect robust growth in profitability and economic profit despite some intermediate volatility. The cost of capital has steadily risen, but invested capital growth and improving economic profit indicate effective capital management and value creation over the examined timeframe.

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 exhibits variability over the analyzed periods, initially increasing from 715 million US dollars in 2020 to 2,491 million in 2022, followed by a decline to 1,327 million in 2023. Subsequently, a notable recovery occurs with economic profit rising to 2,851 million in 2024 and further to 3,018 million in 2025. This pattern suggests periods of both growth and contraction, with a strong upward trend in the later years.

Invested Capital

Invested capital shows an overall upward trajectory, starting at 29,043 million US dollars in 2020 and reaching 37,996 million by 2025. While there is a slight decrease in 2021 and again in 2024, the general direction is an increase, indicating ongoing investments in assets or business expansion over time.

Economic Spread Ratio

The economic spread ratio fluctuates significantly across the periods. It rises sharply from 2.46% in 2020 to 7.87% in 2022, dips to 3.8% in 2023, then ascends again to 8.64% in 2024 before a slight decrease to 7.94% in 2025. These variations reflect changes in profitability relative to invested capital, with the ratio generally maintaining a positive spread, implying sustained value creation in most years.

Overall Analysis

The company demonstrates dynamic economic profit and spread ratio figures, with periods of both growth and regression. Invested capital consistently increases, signaling continued resource allocation towards the business. The economic spread ratio’s fluctuations suggest varying efficiency or return on invested capital, though it largely indicates positive returns. The upward trend in economic profit during the last two periods aligns with higher invested capital and improved economic spread, indicating enhanced profitability and value generation in recent years.

The financial data under review reveals notable trends over the span of six years for the specified company.

Net Sales

The net sales figures exhibit a consistent upward trajectory from 2020 through 2025. Starting at approximately $163 billion in 2020, net sales increased steadily each year, reaching nearly $270 billion by 2025. This represents a substantial increase in revenue generation capacity over the period, indicating strong market demand or successful sales strategies.

Economic Profit

The economic profit demonstrates significant growth overall, rising from $715 million in 2020 to over $3 billion by 2025. However, the trend shows some volatility, with a substantial increase to $2.5 billion in 2022, followed by a pronounced dip in 2023 to roughly $1.3 billion. After this trough, economic profit rebounded sharply, surpassing previous highs in 2024 and 2025. This pattern suggests variations in profitability efficiency or the impact of extraordinary items or operational challenges during 2023.

Economic Profit Margin

The economic profit margin maintains a general upward trend, improving from 0.44% in 2020 to just above 1% in most recent years, signaling enhanced profitability relative to sales. Similar to economic profit, the margin dips in 2023 to 0.56%, before recovering to approximately 1.14% and 1.12% in the following years. This fluctuation mirrors the volatility seen in the economic profit values and indicates a period of reduced margin efficiency during 2023.

In summary, the data indicates consistent growth in sales revenue complemented by overall improvement in economic profitability. Despite a temporary setback in 2023, economic profit and margin both recovered strongly, reflecting resilience and possibly effective management interventions. These patterns may warrant further investigation into the factors affecting profitability in 2023 to better understand risks and opportunities.