Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Lam Research Corp., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2026-06-28), 10-K (reporting date: 2025-06-29), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2026 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 6,736,884 – 25.93% × 17,887,594 = 2,098,197
The analysis of economic profit reveals a period of significant volatility followed by a recovery phase. Between 2021 and 2026, the ability to generate value above the cost of capital fluctuated, characterized by a notable period of value destruction in 2024 followed by a return to positive economic profit.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a non-linear trend, peaking in 2022 at 5.63 billion before experiencing a two-year decline that reached a trough of 3.26 billion in 2024. A substantial recovery is observed in the subsequent years, with NOPAT rising to 6.11 billion in 2025 and reaching 6.74 billion by 2026.
- Capital Base and Cost of Capital
- Invested capital grew steadily from 12.26 billion in 2021 to 17.89 billion in 2026, reflecting a continuous expansion of the capital base. Simultaneously, the cost of capital followed a consistent upward trajectory, increasing from 24.61% to 25.93% over the same period, thereby increasing the financial hurdle required to achieve a positive economic profit.
- Economic Profit Dynamics
- Economic profit peaked in 2022 at 2.32 billion. However, the convergence of declining NOPAT and an increasing cost of capital led to a sharp contraction in value creation, culminating in a negative economic profit of -476 million in 2024. This negative figure indicates that operating returns were insufficient to cover the cost of the capital employed. A strong reversal occurred in 2025 and 2026, with economic profit rebounding to 1.95 billion and 2.10 billion, respectively, as NOPAT growth outpaced the rise in capital costs.
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Net Operating Profit after Taxes (NOPAT)
Lam Research Corp., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2026-06-28), 10-K (reporting date: 2025-06-29), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in product warranty reserves.
5 Addition of increase (decrease) in restructuring liability.
6 Addition of increase (decrease) in equity equivalents to net income.
7 2026 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 387,002 × 4.20% = 16,254
8 2026 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 173,138 × 21.00% = 36,359
9 Addition of after taxes interest expense to net income.
10 2026 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 196,189 × 21.00% = 41,200
11 Elimination of after taxes investment income.
The financial performance from June 2021 through June 2026 is characterized by a period of mid-term volatility followed by a significant acceleration in profitability. Both Net Income and Net Operating Profit After Taxes (NOPAT) exhibit a synchronized trajectory, although the magnitude of fluctuations varies between the two metrics.
- Net Operating Profit After Taxes (NOPAT) Trends
- NOPAT experienced an initial increase from 4.55 billion USD in 2021 to a peak of 5.63 billion USD in 2022. This was followed by a sustained decline over two years, reaching a trough of 3.26 billion USD in 2024. A sharp recovery occurred in 2025, with NOPAT rising to 6.11 billion USD, and continuing upward to 6.74 billion USD by June 2026.
- Net Income Trajectory
- Net Income followed a similar pattern but displayed slightly more stability during the downturn. After rising to 4.61 billion USD in 2022, Net Income decreased more gradually than NOPAT, bottoming out at 3.83 billion USD in 2024. The subsequent growth phase was more aggressive, with Net Income surging to 5.36 billion USD in 2025 and reaching 7.27 billion USD in 2026.
- Comparative Analysis of Operating and Bottom-Line Profitability
- Between 2021 and 2022, NOPAT consistently exceeded Net Income, suggesting that operating performance was the primary driver of value. However, during the 2023-2024 contraction, NOPAT declined more severely than Net Income, indicating a sharper compression in core operating profitability relative to overall net earnings. By 2026, a reversal is observed where Net Income exceeds NOPAT, reflecting a shift in the composition of earnings or the impact of non-operating items.
The data indicates a strong recovery in the final two years of the period, with the 2026 projections for both Net Income and NOPAT significantly exceeding the highs recorded in 2022. This suggests a substantial expansion in both operating efficiency and overall profitability.
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Cash Operating Taxes
Lam Research Corp., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2026-06-28), 10-K (reporting date: 2025-06-29), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27).
An analysis of tax obligations over the six-year period reveals a general upward trajectory, characterized by moderate volatility in the mid-term and a significant escalation in the final two years. A consistent pattern is observed where actual cash operating taxes exceed the provision for income taxes, indicating a higher immediate cash outflow for tax purposes than the periodic accounting charge.
- Provision for Income Taxes
- The provision for income taxes grew from 462,346 thousand in June 2021 to a peak of 598,279 thousand in June 2023. A contraction followed in June 2024, where the provision decreased to 532,450 thousand. However, this was followed by a recovery to 599,912 thousand in June 2025 and a sharp increase to 997,077 thousand by June 2026, representing a substantial rise in recognized tax expenses toward the end of the period.
- Cash Operating Taxes
- Cash operating taxes exhibited higher volatility, starting at 654,450 thousand in June 2021 and peaking early in June 2022 at 882,564 thousand. A downward trend was observed over the next two years, with values declining to 782,173 thousand in 2023 and 717,911 thousand in 2024. This decline was reversed aggressively starting in June 2025, with payments rising to 954,147 thousand and reaching a period high of 1,281,297 thousand in June 2026.
- Analysis of Variance and Trends
- A persistent gap exists between cash operating taxes and income tax provisions. While both metrics trended lower between 2022 and 2024, the acceleration in 2025 and 2026 was more pronounced for cash payments. By June 2026, the variance between the cash operating taxes and the provision for income taxes reached its widest point, with cash payments exceeding provisions by 284,220 thousand.
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Invested Capital
Lam Research Corp., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2026-06-28), 10-K (reporting date: 2025-06-29), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenue.
5 Addition of product warranty reserves.
6 Addition of restructuring liability.
7 Addition of equity equivalents to stockholders’ equity.
8 Removal of accumulated other comprehensive income.
The analysis of the capital structure from June 2021 to June 2026 reveals a consistent expansion of the total invested capital base, which grew from US$ 12.26 billion to US$ 17.89 billion. While the overall trajectory is upward, the composition of this capital has undergone a significant shift, moving from a balanced reliance on debt and equity toward a predominantly equity-funded structure.
- Invested Capital Trends
- Invested capital exhibited a steady increase for most of the period, with a marginal contraction observed between June 2023 and June 2024, where values shifted from US$ 14.99 billion to US$ 14.84 billion. Following this brief stabilization, growth resumed aggressively, reaching a peak of US$ 17.89 billion by June 2026. This represents a total increase of approximately 45.8% over the six-year period.
- Stockholders’ Equity Growth
- Stockholders' equity has been the primary driver of the increase in invested capital. A sustained upward trend is evident, with equity rising from US$ 6.03 billion in 2021 to US$ 12.47 billion in 2026. Notable accelerations occurred between 2022 and 2023 and again between 2025 and 2026, indicating strong internal capital accumulation or significant equity infusions.
- Debt and Lease Obligations
- Total reported debt and leases remained relatively stagnant between 2021 and 2024, fluctuating within a narrow range around US$ 5.2 billion. However, a distinct downward trend emerged starting in June 2025, with debt levels falling to US$ 4.76 billion and further decreasing to US$ 4.12 billion by June 2026. This suggests a strategic shift toward deleveraging in the latter part of the analyzed period.
- Capital Composition Analysis
- The relationship between debt and equity has inverted over the analyzed timeframe. In 2021, debt and equity contributed more equally to the invested capital. By 2026, stockholders' equity accounted for the vast majority of the invested capital, while the relative contribution of debt diminished. This transition indicates a reduction in financial leverage and an increase in the company's equity cushion.
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Cost of Capital
Lam Research Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 389,598,793) | 389,598,793) | ÷ | 393,159,880) | = | 0.99 | 0.99 | × | 26.14% | = | 25.91% | ||
| Long-term debt and finance lease obligations3 | 3,174,085) | 3,174,085) | ÷ | 393,159,880) | = | 0.01 | 0.01 | × | 3.49% × (1 – 21.00%) | = | 0.02% | ||
| Operating lease liability4 | 387,002) | 387,002) | ÷ | 393,159,880) | = | 0.00 | 0.00 | × | 4.20% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 393,159,880) | 1.00 | 25.93% | ||||||||||
Based on: 10-K (reporting date: 2026-06-28).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt and finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 129,093,342) | 129,093,342) | ÷ | 133,257,422) | = | 0.97 | 0.97 | × | 26.14% | = | 25.33% | ||
| Long-term debt and finance lease obligations3 | 3,892,030) | 3,892,030) | ÷ | 133,257,422) | = | 0.03 | 0.03 | × | 3.55% × (1 – 21.00%) | = | 0.08% | ||
| Operating lease liability4 | 272,050) | 272,050) | ÷ | 133,257,422) | = | 0.00 | 0.00 | × | 3.75% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 133,257,422) | 1.00 | 25.41% | ||||||||||
Based on: 10-K (reporting date: 2025-06-29).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt and finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 103,550,135) | 103,550,135) | ÷ | 108,165,592) | = | 0.96 | 0.96 | × | 26.14% | = | 25.03% | ||
| Long-term debt and finance lease obligations3 | 4,327,741) | 4,327,741) | ÷ | 108,165,592) | = | 0.04 | 0.04 | × | 3.58% × (1 – 21.00%) | = | 0.11% | ||
| Operating lease liability4 | 287,716) | 287,716) | ÷ | 108,165,592) | = | 0.00 | 0.00 | × | 3.54% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 108,165,592) | 1.00 | 25.15% | ||||||||||
Based on: 10-K (reporting date: 2024-06-30).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt and finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 86,901,174) | 86,901,174) | ÷ | 91,594,946) | = | 0.95 | 0.95 | × | 26.14% | = | 24.80% | ||
| Long-term debt and finance lease obligations3 | 4,456,204) | 4,456,204) | ÷ | 91,594,946) | = | 0.05 | 0.05 | × | 3.57% × (1 – 21.00%) | = | 0.14% | ||
| Operating lease liability4 | 237,568) | 237,568) | ÷ | 91,594,946) | = | 0.00 | 0.00 | × | 3.80% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 91,594,946) | 1.00 | 24.95% | ||||||||||
Based on: 10-K (reporting date: 2023-06-25).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt and finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 63,425,348) | 63,425,348) | ÷ | 68,216,146) | = | 0.93 | 0.93 | × | 26.14% | = | 24.31% | ||
| Long-term debt and finance lease obligations3 | 4,572,075) | 4,572,075) | ÷ | 68,216,146) | = | 0.07 | 0.07 | × | 3.57% × (1 – 21.00%) | = | 0.19% | ||
| Operating lease liability4 | 218,723) | 218,723) | ÷ | 68,216,146) | = | 0.00 | 0.00 | × | 3.05% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 68,216,146) | 1.00 | 24.50% | ||||||||||
Based on: 10-K (reporting date: 2022-06-26).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt and finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 82,191,181) | 82,191,181) | ÷ | 87,955,709) | = | 0.93 | 0.93 | × | 26.14% | = | 24.43% | ||
| Long-term debt and finance lease obligations3 | 5,600,833) | 5,600,833) | ÷ | 87,955,709) | = | 0.06 | 0.06 | × | 3.57% × (1 – 21.00%) | = | 0.18% | ||
| Operating lease liability4 | 163,695) | 163,695) | ÷ | 87,955,709) | = | 0.00 | 0.00 | × | 2.30% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 87,955,709) | 1.00 | 24.61% | ||||||||||
Based on: 10-K (reporting date: 2021-06-27).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt and finance lease obligations. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Lam Research Corp., economic spread ratio calculation, comparison to benchmarks
| Jun 28, 2026 | Jun 29, 2025 | Jun 30, 2024 | Jun 25, 2023 | Jun 26, 2022 | Jun 27, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 2,098,197) | 1,948,222) | (476,235) | 322,771) | 2,321,230) | 1,534,753) | |
| Invested capital2 | 17,887,594) | 16,358,579) | 14,840,667) | 14,985,787) | 13,512,167) | 12,264,919) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 11.73% | 11.91% | -3.21% | 2.15% | 17.18% | 12.51% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Advanced Micro Devices Inc. | — | -21.43% | -27.69% | -29.12% | -28.73% | 27.84% | |
| Analog Devices Inc. | — | -12.05% | -14.17% | -10.08% | -11.45% | -14.69% | |
| Applied Materials Inc. | — | 17.08% | 10.19% | 13.17% | 23.15% | 18.63% | |
| Broadcom Inc. | — | -2.99% | -10.41% | 4.82% | 3.57% | -5.66% | |
| Intel Corp. | — | -18.73% | -30.05% | -19.94% | -13.15% | 3.44% | |
| KLA Corp. | 27.56% | 20.46% | 16.11% | 20.05% | 22.45% | 10.91% | |
| Marvell Technology Inc. | -8.89% | -26.62% | -26.65% | -22.31% | -25.08% | -26.81% | |
| Micron Technology Inc. | 56.21% | -14.83% | -26.53% | -38.30% | -10.78% | -15.51% | |
| NVIDIA Corp. | 86.10% | 117.20% | 61.75% | -16.34% | 25.86% | 6.34% | |
| Qualcomm Inc. | -1.26% | 7.98% | 3.19% | -4.11% | 22.32% | 19.70% | |
| Texas Instruments Inc. | — | 2.39% | 2.70% | 12.32% | 32.90% | 31.53% | |
Based on: 10-K (reporting date: 2026-06-28), 10-K (reporting date: 2025-06-29), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27).
1 Economic profit. See details »
2 Invested capital. See details »
3 2026 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,098,197 ÷ 17,887,594 = 11.73%
4 Click competitor name to see calculations.
The financial performance exhibits a cyclical pattern characterized by a period of significant value creation, a sharp contraction into negative territory, and a subsequent recovery. The overall trend indicates a volatile relationship between the capital deployed and the resulting economic profit.
- Economic Spread Ratio Analysis
- The economic spread ratio experienced a peak of 17.18% in June 2022, signaling strong value creation above the cost of capital. This was followed by a precipitous decline to 2.15% in 2023 and a further drop to -3.21% in 2024, indicating a period where the return on invested capital failed to meet the required threshold. A recovery is observed in 2025 and 2026, with the ratio stabilizing between 11.73% and 11.91%, returning the organization to a state of positive economic value added.
- Invested Capital Trends
- Invested capital shows a consistent long-term upward trajectory, increasing from 12.26 billion US dollars in 2021 to 17.89 billion US dollars by 2026. Despite a marginal contraction in June 2024, the general trend reflects an expansion of the asset base, which continued even during the period of negative economic spread.
- Economic Profit Volatility
- Economic profit mirrored the fluctuations of the spread ratio, rising from 1.53 billion US dollars in 2021 to a peak of 2.32 billion US dollars in 2022. A severe contraction occurred over the following two years, resulting in a deficit of 476.2 million US dollars in 2024. The subsequent rebound to 1.95 billion US dollars in 2025 and 2.10 billion US dollars in 2026 suggests a successful restoration of operational efficiency and value generation.
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Economic Profit Margin
Lam Research Corp., economic profit margin calculation, comparison to benchmarks
| Jun 28, 2026 | Jun 29, 2025 | Jun 30, 2024 | Jun 25, 2023 | Jun 26, 2022 | Jun 27, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 2,098,197) | 1,948,222) | (476,235) | 322,771) | 2,321,230) | 1,534,753) | |
| Revenue | 23,232,690) | 18,435,591) | 14,905,386) | 17,428,516) | 17,227,039) | 14,626,150) | |
| Add: Increase (decrease) in deferred revenue | (247,063) | 1,129,463) | (286,311) | (360,193) | 1,079,292) | 581,380) | |
| Adjusted revenue | 22,985,627) | 19,565,054) | 14,619,075) | 17,068,323) | 18,306,331) | 15,207,530) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 9.13% | 9.96% | -3.26% | 1.89% | 12.68% | 10.09% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Advanced Micro Devices Inc. | — | -38.19% | -62.53% | -74.32% | -71.26% | 10.49% | |
| Analog Devices Inc. | — | -46.01% | -65.44% | -36.21% | -42.90% | -94.37% | |
| Applied Materials Inc. | — | 12.11% | 7.09% | 8.83% | 13.37% | 11.89% | |
| Broadcom Inc. | — | -7.02% | -28.45% | 8.44% | 6.68% | -13.34% | |
| Intel Corp. | — | -41.31% | -52.23% | -33.86% | -18.50% | 3.85% | |
| KLA Corp. | 20.82% | 15.65% | 13.83% | 15.93% | 18.98% | 10.75% | |
| Marvell Technology Inc. | -20.64% | -82.24% | -92.17% | -75.41% | -111.94% | -82.30% | |
| Micron Technology Inc. | 40.59% | -23.96% | -55.62% | -130.14% | -18.25% | -25.63% | |
| NVIDIA Corp. | 41.70% | 42.44% | 31.17% | -12.92% | 17.34% | 4.95% | |
| Qualcomm Inc. | -1.10% | 5.64% | 2.53% | -3.62% | 14.87% | 11.86% | |
| Texas Instruments Inc. | — | 3.86% | 4.51% | 15.89% | 28.85% | 28.21% | |
Based on: 10-K (reporting date: 2026-06-28), 10-K (reporting date: 2025-06-29), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27).
1 Economic profit. See details »
2 2026 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × 2,098,197 ÷ 22,985,627 = 9.13%
3 Click competitor name to see calculations.
The analysis of economic value added over the six-year period reveals a cyclical performance pattern characterized by initial growth, a severe contraction into negative territory, and a subsequent recovery phase.
- Economic Profit Trends
- Economic profit demonstrated significant volatility, increasing from 1.53 billion USD in June 2021 to a peak of 2.32 billion USD in June 2022. This was followed by a sharp decline, resulting in a negative economic profit of -476.2 million USD by June 2024, indicating a period where the company did not generate returns above its cost of capital. A strong recovery occurred in 2025, with economic profit returning to 1.95 billion USD and further increasing to 2.10 billion USD by June 2026.
- Adjusted Revenue Correlation
- Revenue movements closely aligned with economic profit trends. Revenue grew from 15.21 billion USD in 2021 to 18.31 billion USD in 2022, before declining to a period low of 14.62 billion USD in 2024. The subsequent rebound was aggressive, with revenue reaching a period high of 22.99 billion USD by June 2026, supporting the return to positive economic value creation.
- Economic Profit Margin Volatility
- The economic profit margin experienced extreme fluctuations, peaking at 12.68% in 2022 and bottoming at -3.26% in 2024. Although the margin recovered significantly to 9.96% in 2025, a slight contraction to 9.13% was observed in 2026. This indicates that while absolute economic profit increased in the final year, the rate of growth was slightly lower than the growth rate of adjusted revenue.
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