Express Scripts Holding Co. (NASDAQ:ESRX)

The financial data over the five-year period reveal key trends in profitability, capital deployment, and efficiency in generating returns.

Net Operating Profit After Taxes (NOPAT)

The company exhibited a positive growth trajectory in net operating profit after taxes from 2013 to 2016, increasing from approximately $1.82 billion to about $3.38 billion. This reflects a significant improvement in operational profitability. However, in 2017, there is a slight decline in NOPAT to roughly $3.27 billion, indicating a small contraction after several years of growth.

Invested Capital

Invested capital demonstrates a decreasing trend from 2013 through 2016, moving from around $41.29 billion down to $35.71 billion. This suggests a reduction in the capital employed by the company during this time span, which might be indicative of divestment, efficiency improvements, or changes in asset base. In 2017, there is a reversal in this downward trend with invested capital increasing moderately to about $37.01 billion.

Return on Invested Capital (ROIC)

The return on invested capital shows a continuous upward trend between 2013 and 2016, rising from 4.4% to a peak of 9.45%, which signals improved capital efficiency and profitability relative to the invested capital. This strong improvement implies better utilization of assets to generate operating profits. In 2017, ROIC experiences a minor decrease to 8.85%, aligning with the small drop in NOPAT despite the increase in capital employed.

Overall, the data indicate that the company strengthened its operational performance and capital efficiency over the initial four-year period. The year 2017 shows a mild decline in both profitability and return ratios, alongside a modest increase in invested capital, which could warrant further investigation to understand its underlying causes. The trends reflect a mature stage where growth in profit generation has slowed, and capital deployment has slightly increased, affecting returns.

Operating profit margin (OPM)

The operating profit margin demonstrates a consistent upward trend over the analyzed period. Starting at 3.56% in 2013, it gradually increased each year, reaching 5.56% by 2017. This reflects an improvement in operational efficiency and profitability.

Turnover of capital (TO)

Turnover of capital shows a steadily increasing trend from 2.52 in 2013 to 2.81 in 2016, followed by a slight decline to 2.7 in 2017. Overall, the data indicates enhanced asset utilization up to 2016, with a minor reduction in the last year.

1 – Effective cash tax rate (CTR)

The effective cash tax rate fluctuates throughout the period, beginning at 49.02% in 2013 and peaking sharply at 65.94% in 2016 before decreasing to 58.82% in 2017. This volatility suggests variability in tax planning or regulatory impact affecting net cash taxes paid.

Return on invested capital (ROIC)

Return on invested capital exhibits a strong upward trajectory, rising from 4.4% in 2013 to a high of 9.45% in 2016, followed by a slight decrease to 8.85% in 2017. The overall increase signifies growing effectiveness in generating returns from the company’s invested capital, despite the minor reduction in the final year.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes exhibits a generally increasing trend over the analyzed period. Starting at approximately 3.71 billion US dollars in 2013, it experiences a slight decline in 2014 to around 3.62 billion. From 2014 onward, there is a consistent upward trajectory reaching about 5.57 billion by the end of 2017. This indicates an overall enhancement in profitability from core operations before taxation.

Revenues

Revenues remain relatively stable across the five-year span, fluctuating slightly but without a clear upward or downward trend. Beginning at roughly 104.1 billion US dollars in 2013, revenues dip marginally in 2014 and hover close to 100 billion in the following years, ending at nearly 100.1 billion in 2017. This stability suggests a steady generation of sales or income without significant growth or contraction.

Operating Profit Margin (OPM)

The operating profit margin demonstrates a positive trend, indicating improved efficiency or profitability relative to revenues. It starts at 3.56% in 2013 and remains nearly constant in 2014 at 3.59%. Thereafter, a marked increase is seen, rising to 4.22% in 2015, 5.1% in 2016, and reaching 5.56% by 2017. This increase in margin amidst stable revenues suggests better cost management or increased value generation from operating activities.

Overall Analysis

The financial data points to enhanced operational profitability over the period despite stable revenues. The growth in net operating profit before taxes combined with an increasing operating profit margin indicates improving operational efficiency or cost control measures. The absence of significant revenue growth suggests that the company has been successful in optimizing its operations rather than expanding its top-line revenue substantially during these years.

The financial data over the five-year period ending December 31, 2017, presents a stable revenues trend along with gradual shifts in invested capital and capital turnover ratios.

Revenues

Revenues consistently hovered around the 100 billion US dollar mark, starting at 104,098,800 thousand in 2013 and slightly decreasing to 100,064,600 thousand by 2017. The yearly values demonstrate minor fluctuations but no significant growth or decline, indicating a stable revenue base throughout the period.

Invested Capital

Invested capital exhibited a downward trend from 41,289,230 thousand in 2013 to 35,712,343 thousand in 2016, reflecting a reduction in capital investment or increased efficiencies. However, there was a slight uptick in 2017, reaching 37,007,152 thousand. This pattern suggests a strategic realignment or reinvestment after a period of capital reduction.

Turnover of Capital (TO)

The turnover of capital ratio steadily improved from 2.52 in 2013 to a peak of 2.81 in 2016, indicating enhanced efficiency in generating revenues from invested capital. In 2017, the ratio slightly declined to 2.7 but remained higher than the initial years, demonstrating sustained operational effectiveness.

Overall, the company maintained stable revenue levels while managing to improve capital efficiency during the period, as evidenced by the increasing turnover ratio despite fluctuations in invested capital.

Cash Operating Taxes

The cash operating taxes exhibited some variability over the five-year period. Starting at approximately 1.89 billion US dollars in 2013, there was a decline in 2014 to about 1.67 billion. The figure then increased notably in 2015 to around 2.00 billion, followed by a decrease in 2016 to approximately 1.74 billion. In 2017, cash operating taxes rose again reaching the highest value in the period at roughly 2.29 billion.

Net Operating Profit Before Taxes (NOPBT)

Net operating profit before taxes showed a generally upward trend throughout the period. It began at around 3.71 billion US dollars in 2013 and slightly decreased in 2014 to about 3.62 billion. From 2015 onwards, there was consistent growth each year, reaching approximately 4.29 billion in 2015, 5.12 billion in 2016, and finally peaking at about 5.57 billion in 2017. This pattern indicates improving operating profitability before tax considerations.

Effective Cash Tax Rate (CTR)

The effective cash tax rate fluctuated during the period, showing a general downward trend until 2016, followed by an increase in 2017. In 2013, the rate was just over 50%, which declined sharply to 46.08% in 2014 and remained close to that level in 2015 at 46.67%. A significant drop occurred in 2016, lowering the rate to 34.06%. However, in 2017, the rate rebounded to 41.18%. These fluctuations reflect changes in tax liabilities relative to operating profit before taxes.

Overall Observations

While the company's net operating profit before taxes consistently improved from 2015 onwards, the cash operating taxes did not follow a uniform trend, suggesting varying tax strategies or changes in taxable income composition. The effective cash tax rate's decline until 2016 may indicate tax optimization or changes in tax regulations, but the subsequent increase in 2017 suggests a potential reversal or other influencing factors. The data implies a dynamic tax environment and operational profitability improvement over the five years analyzed.