Lam Research Corp. (NASDAQ:LRCX)

The financial data reveals several noteworthy trends and fluctuations over the analyzed periods.

Net Operating Profit After Taxes (NOPAT)

The NOPAT shows a marked increase from 2,400,750 thousand US dollars in mid-2020 to a peak of 5,632,304 thousand US dollars by mid-2022. Subsequently, a decline is observed, with the value dropping to 3,256,005 thousand US dollars in mid-2024, followed by a significant recovery to 6,105,707 thousand US dollars by mid-2025. This pattern indicates periods of both strong profitability and contraction, culminating in a substantial rebound.

Cost of Capital

The cost of capital exhibits a steady incremental trend, rising from 18.03% in 2020 to 19.51% in 2025. This gradual increase suggests a steadily rising hurdle rate for investments, potentially reflecting changing market conditions or increased perceived risk over time.

Invested Capital

Invested capital has consistently grown across the examined years, moving from approximately 11.8 billion US dollars in 2020 to 16.4 billion US dollars in 2025. This upward trajectory indicates ongoing capital deployment into the business, likely for growth or expansion initiatives, albeit with slight stagnation noted around mid-2024.

Economic Profit

The economic profit displays considerable volatility. After starting at 274,981 thousand US dollars in 2020, it experiences a sharp rise to 3,087,424 thousand US dollars in mid-2022. Thereafter, there is a pronounced decline to 390,233 thousand US dollars by mid-2024, followed by a resurgence to 2,914,709 thousand US dollars in mid-2025. These swings imply fluctuating value creation relative to the cost of capital, correlating with the NOPAT movements but tempered by the rising cost of capital.

In summary, the company experiences strong growth in profitability and invested capital over the period, with notable cyclical declines especially evident between 2022 and 2024. The rising cost of capital influences economic profit trends, underscoring the challenge of sustaining value creation amid increasing capital costs. The sharp rebounds seen in the latest period suggest operational improvements or market conditions favoring enhanced returns.

Net Income

The net income demonstrated a generally positive trend over the analyzed period, with some fluctuations. Starting at approximately 2.25 billion USD in 2020, it almost doubled in 2021 to 3.91 billion USD and increased further to about 4.61 billion USD in 2022. A slight decrease occurred in 2023, falling to 4.51 billion USD, followed by a more pronounced decline in 2024 to 3.83 billion USD. However, in 2025, net income surged significantly to approximately 5.36 billion USD, marking the highest point in the time frame.

Net Operating Profit After Taxes (NOPAT)

The NOPAT showed a generally upward trajectory until 2022, beginning at about 2.40 billion USD in 2020 and increasing substantially to approximately 5.63 billion USD by 2022. However, there was a notable reduction in the following years; NOPAT dropped to 4.06 billion USD in 2023 and further declined to 3.26 billion USD in 2024. A strong recovery is observed in 2025, with NOPAT rising sharply to around 6.11 billion USD, the highest value recorded in the examined periods.

General Observations

Both net income and NOPAT largely followed similar trends, with growth peaking in 2022, followed by declines in 2023 and 2024, prior to significant recoveries in 2025. The reductions in 2023 and 2024 suggest temporary challenges affecting profitability and operational efficiency. The considerable rebound in 2025 indicates successful measures to restore profitability and operational performance. Overall, the company appears to maintain strong profit-generating capabilities with cyclical variability.

Provision for Income Taxes

The provision for income taxes exhibits a generally increasing trend from 2020 through 2023, rising from approximately 323 million US dollars in 2020 to nearly 598 million US dollars in 2023. However, in the subsequent year (2024), there is a noticeable decline to about 532 million US dollars, before rising again significantly in 2025 to approximately 600 million US dollars. This pattern suggests some fluctuation in estimated tax liabilities despite an overall upward movement.

Cash Operating Taxes

Cash operating taxes show a consistent and marked upward trajectory over the entire period analyzed. Starting at approximately 361 million US dollars in 2020, cash taxes almost double to around 654 million US dollars in 2021. The upward momentum continues sharply into 2022 with cash taxes reaching about 883 million US dollars. Although there is a downward adjustment in 2023 and 2024—declining to roughly 782 million and 718 million US dollars respectively—the value increases again considerably in 2025 to approximately 954 million US dollars. This indicates variability in actual cash outflows for taxes, with a generally increasing trend over the six-year period.

Comparative Insights

When comparing provision for income taxes with cash operating taxes, cash taxes have consistently been higher than provisions throughout all years. The gap between these two metrics widens substantially from 2020 to 2022, implying that actual tax payments in cash increasingly exceeded estimated provisions in these years. Although provisions increase steadily, the fluctuations and higher amounts in cash operating taxes may reflect timing differences, changes in tax planning strategies, or variations in tax payments versus accrual estimates.

Total Reported Debt & Leases

The total debt and leases demonstrate a declining trend over the reported periods. Starting from approximately 5.98 billion in mid-2020, the amount decreases to around 4.76 billion by mid-2025. This suggests a possible strategy of reducing leverage or paying down debt over the years, particularly notable from mid-2024 to mid-2025.

Stockholders’ Equity

Stockholders’ equity shows a consistent upward trend across all periods. It grows from about 5.17 billion in 2020 to nearly 9.86 billion in 2025. This significant increase indicates enhanced company value or accumulated earnings, suggesting strengthened financial health and increased net assets over time.

Invested Capital

Invested capital rises steadily from approximately 11.79 billion in 2020 to around 16.36 billion in 2025, with a minor dip observed between mid-2023 and mid-2024. This overall upward movement reflects continued investment in operations or assets, supporting growth initiatives or expansion efforts.

The analysis of the financial metrics over the reviewed periods reveals notable fluctuations in economic profit, invested capital, and economic spread ratio.

Economic Profit

This metric experienced significant variability throughout the periods. Starting at approximately 275 million US dollars, economic profit surged sharply to over 2.2 billion in the following year, marking substantial growth. It continued to increase to roughly 3.1 billion in the third year, before dropping markedly to just under 1.2 billion in the fourth year. The subsequent year saw a further decline to 390 million, but the latest period recorded a strong recovery to nearly 2.9 billion. Such volatility indicates periods of both rapid value creation and contraction.

Invested Capital

Invested capital demonstrated a generally increasing trend over the timeframe. Beginning at around 11.8 billion US dollars, the figure rose steadily each year, reaching approximately 16.4 billion by the most recent period. The incremental increases suggest ongoing capital investment and expansion despite interim fluctuations in economic profit.

Economic Spread Ratio

The economic spread ratio followed a pattern resembling the economic profit trend but on a percentage basis. Initially low at 2.33%, it surged sharply to 18.21% and further to 22.85%, indicating a period of enhanced returns relative to invested capital. This was followed by a pronounced decrease to 7.94% and then to 2.63%, reflecting diminished profitability relative to capital employed. The ratio climbed again to 17.82% in the final period, correlating with the rebound in economic profit. This ratio variability underscores shifts in operational efficiency or market conditions impacting return on invested capital.

Overall, the data portrays cycles of robust profitability and growth followed by contractions. Despite these fluctuations, invested capital grew continuously, signaling ongoing commitment to business expansion. The volatility in economic profit and spread ratio may merit further examination to understand underlying drivers such as market dynamics, cost management, or investment returns.

Revenue Trends

The adjusted revenue demonstrates an overall upward trajectory with fluctuations over the periods analyzed. Starting at approximately 10.13 billion USD in 2020, revenue increased significantly to over 18.3 billion USD by 2022. However, a decline is observed in 2023 and 2024, reaching around 14.6 billion USD before rebounding strongly to nearly 19.6 billion USD in 2025. This indicates volatility but general growth with a notable dip in the middle years.

Economic Profit Patterns

The economic profit exhibits considerable variability across the periods. It began at approximately 275 million USD in 2020, surged sharply to over 2.2 billion USD in 2021, and peaked at around 3.1 billion USD in 2022. Subsequently, economic profit declined substantially to just under 1.2 billion USD in 2023 and further to around 390 million USD in 2024, before rising again to nearly 2.9 billion USD in 2025. This pattern indicates episodic strong profitability with intermittent downturns.

Economic Profit Margin

The economic profit margin largely mirrors the fluctuations seen in economic profit and adjusted revenue. It starts at a modest 2.71% in 2020, increases markedly to 14.69% in 2021 and 16.87% in 2022, showing improved profitability efficiency. A sharp decrease follows in 2023 and 2024 to 6.97% and 2.67%, respectively, before recovering to 14.9% in the final period. This suggests variable profit efficiency potentially linked to operational or market conditions.

Summary

The financial data reveals cyclical patterns of growth and contraction in both revenue and economic profit over the six-year period. Revenue growth is generally positive but marked by a decline in the middle years, while economic profit exhibits sharp rises and falls, influencing profit margins similarly. The recovery in the most recent period indicates a restoration of profitability and efficiency after a period of weakness. These trends imply sensitivity to external or internal factors impacting financial performance intermittently.