Intel Corp. (NASDAQ:INTC)

The analysis of the annual financial data reveals a significant downward trend in the company's profitability and economic profit over the observed periods. Net operating profit after taxes (NOPAT) experienced a pronounced decline, decreasing from US$22,960 million in 2020 to a negative value of US$-13,095 million in 2024. This pattern indicates escalating operational challenges and reduced efficiency in generating profit from core operations.

The cost of capital has remained relatively stable, fluctuating modestly between 11.62% and 13.63%. This suggests that the company’s capital costs did not undergo significant changes, implying that external market conditions or changes in the company’s creditworthiness have been relatively consistent.

Invested capital increased steadily over the years, rising from approximately US$81,967 million in 2020 to US$92,296 million in 2024. This growth signals ongoing investment in assets or operations despite the declining profitability, which may raise concerns regarding capital allocation efficiency.

Economic profit, which reflects the value created above the cost of capital, shows a marked decline. Starting at US$11,784 million in 2020, it deteriorated into negative territory by 2022 and reached a substantial negative value of US$-23,820 million in 2024. This negative economic profit indicates that the company is not generating sufficient returns to cover its cost of capital, highlighting a loss of shareholder value during this period.

Summary of Observations

The consistent fall in NOPAT combined with increasing invested capital and stable cost of capital results in a deteriorating economic profit profile.

The negative economic profits from 2022 onwards signify financial underperformance and possible operational or strategic challenges that need to be addressed.

The rising invested capital amidst declining profitability may point to inefficiencies or unprofitable investments impacting overall returns.

Net Income (Loss) Attributable to Intel

The net income attributable to the company demonstrates a declining trend over the observed five-year period. In 2020, net income was robust at 20,899 million US dollars, followed by a slight decline to 19,868 million in 2021. Subsequently, the net income sharply decreased to 8,014 million in 2022 and further declined to a marginal 1,689 million in 2023. The latest period, 2024, shows a significant shift with a reported net loss of 18,756 million US dollars, indicating considerable financial challenges during this year.

Net Operating Profit After Taxes (NOPAT)

The NOPAT values depict a similar downward trajectory over the same timeline. The highest NOPAT figure was recorded in 2020 at 22,960 million US dollars. This declined moderately to 19,493 million in 2021, followed by a steeper drop to 3,672 million in 2022. In 2023, the company reported a negative NOPAT of 1,469 million, which further deteriorated to a negative 13,095 million in 2024. This trend points to declining operational profitability and indicates increasing operational inefficiencies or challenges.

Overall Analysis

Both net income and NOPAT exhibit a consistent decline throughout the period, culminating in losses by 2024. The transition from substantial profits in earlier years to losses in recent years suggests significant adverse developments in the company's financial performance. The negative figures in both metrics for the last two years highlight deteriorating profitability and may reflect increased costs, reduced revenues, or other operational difficulties. The gap between net income and NOPAT remains relatively consistent in direction, affirming that operating profitability issues are a key factor in the overall financial decline.

The financial data reveals notable fluctuations in tax-related figures over the five-year period from 2020 to 2024. Two primary tax metrics are observed: the provision for (benefit from) taxes and cash operating taxes, both measured in millions of U.S. dollars.

Provision for (benefit from) taxes

In 2020, the provision was a positive value of $4,179 million, indicating a tax expense. This figure decreased significantly to $1,835 million in 2021, suggesting a reduction in tax expense. In the subsequent years, the provision turned negative, at -$249 million in 2022 and further to -$913 million in 2023, which reflects a tax benefit (or potential tax credits/refunds) recognized by the company during these periods. However, in 2024, there is a sharp reversal, with the provision rising dramatically to $8,023 million, representing a substantial tax expense increase compared to previous years.

Cash operating taxes

Cash operating taxes demonstrated a steady increase from $2,488 million in 2020 to $2,675 million in 2021. This upward trend accelerated in 2022, reaching $4,893 million, which is a significant increase. However, the amount decreased substantially in 2023 to $1,005 million, before rising again in 2024 to $1,916 million. These movements suggest variability in the actual cash taxes paid, which do not exactly mirror the trends observed in the provision for taxes. The divergence between provision and cash taxes particularly in 2022 and 2023 highlights potential timing differences or adjustments related to deferred tax assets/liabilities or tax planning strategies.

Overall, the data indicates volatility in tax expense recognition and cash taxes paid across the five years. The negative provisions in 2022 and 2023 contrast with the cash taxes paid, implying tax benefits recorded in the accounts that did not translate immediately into cash savings. The sharp increase in provision in 2024, alongside rising cash tax payments, may reflect changes in tax regulations, adjustments, or an increase in taxable income. The inconsistencies between provision and cash taxes underscore complexities in the tax treatment and possibly strategic tax management during this period.

The financial data reveals several key trends pertaining to the company's debt, equity, and invested capital over the five-year period from 2020 to 2024.

Total reported debt & leases

This metric shows a consistent upward trend throughout the period. Starting at 36,928 million USD in 2020, it increased annually, reaching 50,471 million USD by 2024. The growth rate appears to accelerate particularly between 2022 and 2023, indicating increased leverage or obligations in recent years.

Total Intel stockholders’ equity

Stockholders’ equity also trended upward from 81,038 million USD in 2020 to a peak of 105,590 million USD in 2023. However, there is a noticeable decline in 2024, where equity decreased to 99,270 million USD. This dip after steady growth may suggest changes in retained earnings, dividend payments, share buybacks, or other equity-related activities impacting shareholders' net assets.

Invested capital

Invested capital rose more moderately compared to debt and equity. It increased from 81,967 million USD in 2020 to 92,296 million USD in 2024. While the upward movement is steady, the increments between years are smaller, and the curve flattens especially between 2022 and 2024, indicating stability or slower growth in capital investments relative to debt expansion.

In summary, the company's debt obligations have increased significantly, suggesting higher leverage or financing activities. While stockholders’ equity showed robust growth until 2023, a decline in 2024 raises questions about changes in capital structure or profitability. Invested capital growth is present but more restrained, reflecting cautious or stable investment in assets. These patterns collectively highlight a shift towards increased debt financing with potential impacts on shareholder value and capital deployment strategies.

The financial data reveals notable trends over the five-year period ending in 2024.

Economic Profit

Economic profit shows a declining trend throughout the period. Starting at a positive US$11,784 million in 2020, economic profit decreased significantly to US$7,747 million in 2021. Thereafter, it turned negative, reaching -US$7,363 million in 2022 and continued to deteriorate to -US$13,641 million in 2023. The downward trend accelerated further in 2024, culminating in an economic loss of -US$23,820 million.

Invested Capital

Invested capital exhibited a steady increase across the five years. It rose from US$81,967 million in 2020 to US$88,498 million in 2021. The investment level remained relatively stable between 2021 and 2022, with a slight increase to US$88,671 million. Subsequently, it increased further to US$92,095 million in 2023 and then slightly to US$92,296 million in 2024.

Economic Spread Ratio

The economic spread ratio followed a declining trajectory that mirrors the economic profit trend. Initially strong at 14.38% in 2020, it dropped sharply to 8.75% in 2021. The ratio turned negative in 2022 with a value of -8.3%, deepening to -14.81% in 2023 and further declining to -25.81% in 2024. This indicates deteriorating returns on invested capital over the period.

Overall, the data indicates a worsening economic performance despite incremental increases in invested capital. The transition from positive to negative economic profit and spread ratio suggests the company's capital deployment is generating diminishing returns, leading to significant economic losses by 2024.

The financial data presents a clear and concerning downward trend in key profitability indicators over the five-year period analyzed. Net revenue shows a consistent decline after peaking in 2021, decreasing from 79,024 million US dollars to 53,101 million US dollars by the end of 2024. This represents a substantial reduction in total revenue, indicating possible challenges in maintaining sales or pricing power.

Economic profit, which was positive and relatively strong in 2020 and 2021, turns negative starting in 2022 and continues to deteriorate through 2024. The economic profit dropped from 7,747 million US dollars in 2021 to negative 23,820 million US dollars in 2024, reflecting increasing economic losses.

This trend is also mirrored in the economic profit margin, which moved from a healthy margin of 15.13% in 2020 and 9.8% in 2021 to negative values thereafter, reaching a substantial deficit of -44.86% in 2024. The margin contraction suggests that profitability per unit of net revenue has worsened considerably.

The overall pattern indicates a significant decline in both revenue and economic profitability, highlighting potentially deteriorating operational efficiency or increased costs against shrinking revenues. The persistent negative economic profit and margin in the last three years signal a critical area requiring strategic management attention.