Lam Research Corp. (NASDAQ:LRCX)

The financial data reveals several notable trends over the analyzed periods. The Net Operating Profit After Taxes (NOPAT) shows considerable fluctuation. Initially, there was a significant increase from 2,400,750 thousand USD in 2020 to a peak of 5,632,304 thousand USD in 2022. However, after 2022, NOPAT experienced a decline, dropping to 3,256,005 thousand USD in 2024 before rebounding sharply to 6,105,707 thousand USD by 2025. This pattern indicates periods of volatility in operating profitability.

Examining the cost of capital, a gradually increasing trend is evident. Starting at 18% in 2020, the cost of capital rises nearly continuously each year, reaching 19.47% in 2025. This steady growth suggests a slight upward pressure on the company’s funding costs, which could affect investment decisions and economic profit.

The Invested Capital shows a general upward trend across the observed years, moving from approximately 11.8 billion USD in 2020 to about 16.4 billion USD in 2025. There was a steady accumulation of invested capital through annual expansions, with only a small dip observed in 2024. The increase in invested capital implies ongoing investments in assets or working capital to support business operations.

The Economic Profit displays a pattern somewhat aligned with NOPAT but with greater volatility. It surged from 279,098 thousand USD in 2020 to over 3 billion USD in 2022, indicating strong value creation during this period. However, after this peak, economic profit declined considerably to 395,849 thousand USD in 2024, reflecting a potential decrease in returns over the cost of capital. This metric rebounded again in 2025 to approximately 2.9 billion USD, signifying improved economic value generation in the most recent year.

Summary of Trends

The company's profitability, as measured by NOPAT, demonstrates cyclical behavior with peaks in 2022 and 2025, and a dip between these years.

The cost of capital steadily rises, which may exert increasing pressure on achieving sufficient returns over time.

Invested capital generally increases, indicating ongoing investment to support operational growth or capacity expansion.

Economic profit, representing value creation beyond capital costs, reflects the volatility in profitability and cost pressures, with high economic value creation in 2022 and 2025 and lower returns in the interim period.

Overall, the data suggests the company experienced strong performance in the earlier half of the period followed by a challenging interval around 2024, but recovered by 2025. The rising cost of capital and growing invested capital emphasize the importance of efficiently generating returns to maintain economic profitability in the future.

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 company's financial performance over the six-year period reveals fluctuating trends in key profitability metrics. The economic profit exhibits considerable variation, indicating shifts in the company's ability to generate value over and above the cost of invested capital.

Economic Profit

Economic profit increased significantly from approximately 279 million in 2020 to over 2.2 billion in 2021, reaching a peak of over 3 billion in 2022. However, this was followed by a sharp decline to about 1.2 billion in 2023 and further down to roughly 396 million in 2024. In 2025, economic profit rebounded strongly to nearly 3 billion. This pattern suggests periods of high profitability interspersed with intervals of decreased economic value creation.

Invested Capital

The invested capital demonstrated a consistent upward trajectory throughout the years, increasing from about 11.8 billion in 2020 to approximately 16.4 billion in 2025. This steady growth reflects ongoing investment in the company’s operations or assets, contributing to the expansion of its capital base.

Economic Spread Ratio

The economic spread ratio, which represents the return on invested capital above its cost, followed a similar pattern to economic profit. Starting at 2.37% in 2020, it surged to a high of 22.89% in 2022, indicating a period of exceptional value creation. This was followed by a decline to 7.98% in 2023 and a further decrease to 2.67% in 2024. The ratio then recovered to 17.86% in 2025, aligning with the rebound in economic profit.

Overall, the data suggests that while the company has steadily increased its invested capital, its efficiency in generating economic profit and achieving a high economic spread ratio has experienced volatility. The periods of decline in profitability metrics may warrant further investigation to understand underlying causes and to sustain value creation going forward.

Revenue Trends

Adjusted revenue exhibited a generally upward trajectory over the observed periods. Starting from approximately 10.13 billion, revenue increased notably to over 15.2 billion and then to about 18.3 billion in successive years. Though there was a decline to approximately 14.6 billion in the second-to-last period, revenue recovered strongly to nearly 19.6 billion in the final period analyzed.

Economic Profit Trends

Economic profit showed significant volatility across the periods. An initial value of roughly 279 million surged dramatically to over 2.2 billion and further to 3.1 billion. However, the subsequent period disclosed a sharp decline to approximately 1.2 billion, followed by another drop to around 396 million. The last period revealed a strong rebound to just over 2.9 billion, reflecting considerable fluctuations in profitability.

Economic Profit Margin Trends

The economic profit margin mirrored the fluctuations in economic profit. After starting at a modest 2.75%, it increased sharply to 14.72% and further to a peak of 16.89%. The margin then decreased significantly to 7%, falling further to approximately 2.71%, before recovering to almost 14.93% in the final period.

Overall Insights

The data indicates a pattern of substantial growth in revenue accompanied by more pronounced volatility in economic profit and profit margins. Economic profit and its margin appear to be sensitive to factors beyond revenue growth, as periods of increased revenue do not always correspond to higher economic profit. The notable dip in economic profit and margin in the mid-period suggests challenges in cost management or external market conditions affecting profitability despite relatively high revenues. The final period's rebound in both economic profit and margin, along with increased revenue, suggests a potential recovery or improved operational efficiency.