Qualcomm Inc. (NASDAQ:QCOM)

Net Operating Profit After Taxes (NOPAT)

The NOPAT experienced fluctuations over the observed periods. It initially declined from 5963 million USD in 2019 to 4798 million USD in 2020, indicating a reduction in operating profitability. Subsequently, there was a significant increase reaching 8512 million USD in 2021 and peaking at 13145 million USD in 2022. However, the profit decreased sharply to 5865 million USD in 2023 before recovering to 8262 million USD in 2024. This pattern reflects volatility in operational performance with a notable peak in 2022.

Cost of Capital

The cost of capital demonstrated a gradual upward trend throughout the period. Starting at 15.44% in 2019, it increased steadily to 16.69% by 2024. The range remains relatively narrow, but the consistent rise suggests an increasing required rate of return or greater risk perception by investors over time.

Invested Capital

Invested capital showed variability with an overall increasing trend. Beginning at 21089 million USD in 2019, it declined to 17459 million USD in 2020, possibly due to divestitures or capital reductions. From 2020 onward, invested capital rose substantially, reaching a high of 31383 million USD in 2023 before a slight decline to 30887 million USD in 2024. This implies significant reinvestment or asset growth after 2020.

Economic Profit

Economic profit, a measure of value creation above the cost of capital, followed a cyclical pattern. It decreased from 2707 million USD in 2019 to 1989 million USD in 2020, then increased sharply to 5269 million USD in 2021 and further to 8430 million USD in 2022. However, it fell again to 784 million USD in 2023 before recovering to 3107 million USD in 2024. This pattern aligns with fluctuations in NOPAT and suggests profitability relative to invested capital was uneven across the periods.

Summary

The financial data reveals a pattern of volatility in profitability and economic value generation, with peaks in 2022 followed by declines in 2023. The cost of capital has steadily increased, indicating rising capital costs or risk. Invested capital experienced a dip in 2020, succeeded by consistent growth. These dynamics suggest challenges impacting profitability at specific intervals but also points to recovery phases, highlighting the importance of managing investment efficiency and cost of capital going forward.

The financial data reveals notable fluctuations in both net income and net operating profit after taxes (NOPAT) over the analyzed six-year period.

Net Income

Net income demonstrated a general upward trajectory from 2019 through 2022, with a marked increase from $4,386 million in 2019 to $12,936 million in 2022. This indicates a strong growth phase during these years.

However, in 2023, net income experienced a significant decline, dropping to $7,232 million, which is approximately a 44% decrease from the previous year. This suggests a material change in profitability or potential challenges faced during this period.

In 2024, net income recovered to $10,142 million, indicating a rebound though still below the peak achieved in 2022.

Net Operating Profit After Taxes (NOPAT)

NOPAT followed a somewhat similar pattern to net income, initially decreasing from $5,963 million in 2019 to $4,798 million in 2020, which contrasts with the initial increase in net income for 2020. This may reflect operational challenges or higher effective tax rates impacting after-tax operating profit in that year.

From 2020 onwards, NOPAT increased substantially to reach its peak of $13,145 million in 2022, consistent with the peak seen in net income, indicating strong operating performance.

In 2023, NOPAT dropped sharply to $5,865 million, representing a more pronounced decline compared to net income for the same period. This could suggest operational inefficiencies, increased costs, or other factors adversely impacting core operations.

By 2024, NOPAT improved to $8,262 million, showing partial recovery though remaining significantly below the 2022 peak.

Overall, the data indicates strong growth up to 2022 followed by a considerable dip in 2023 in both net income and NOPAT. The subsequent recovery in 2024, while positive, does not fully restore performance to prior peak levels. The larger proportional decline and slower recovery in NOPAT compared to net income in the downturn suggest that underlying operating profitability was particularly affected during the challenging period.

Income tax provision from continuing operations

The income tax provision experienced a significant decline from 3,095 million USD in 2019 to 521 million USD in 2020. Following this sharp decrease, the provision saw a moderate recovery, rising to 1,231 million USD in 2021 and further increasing to 2,012 million USD in 2022. However, in the subsequent years, it sharply declined again to 104 million USD in 2023, before slightly rebounding to 226 million USD in 2024. This pattern suggests considerable volatility in the tax expense, with substantial fluctuations over the period examined.

Cash operating taxes

Cash operating taxes demonstrated a somewhat different trend compared to the income tax provision. After a decrease from 1,167 million USD in 2019 to 793 million USD in 2020, cash operating taxes increased significantly to 1,484 million USD in 2021 and continued to rise to 2,189 million USD in 2022. Although there was a decline in 2023 to 1,803 million USD, cash operating taxes increased again to 2,127 million USD in 2024. Overall, this indicates a generally upward trend in cash operating taxes over the timeframe, with occasional decreases but a recovery subsequent to those declines.

Comparative observations

The divergence between income tax provision and cash operating taxes is notable. While the income tax provision shows high variability and generally lower levels in recent years, cash operating taxes have trended upwards, suggesting possible timing differences or adjustments affecting the provision relative to actual tax cash outflows. The disparity between accrued tax expense and cash taxes paid might warrant further investigation to understand tax accounting policies or one-time tax impacts during this period.

Total Reported Debt & Leases

The total reported debt and leases exhibit a slightly decreasing trend over the analyzed periods. Starting from US$16,287 million in 2019, the figure shows minor fluctuations but generally moves downward to US$15,440 million by 2024. This reflects a moderate reduction in leverage or financial obligations over time.

Stockholders’ Equity

Stockholders’ equity demonstrates a strong upward trajectory throughout the periods. Beginning at US$4,909 million in 2019, equity increases significantly each year, reaching US$26,274 million in 2024. This substantial rise indicates a growing value attributable to shareholders, possibly due to profitable operations, retained earnings accumulation, or capital injections.

Invested Capital

Invested capital presents a more variable pattern with an overall increase. It starts at US$21,089 million in 2019, decreases to a low of US$17,459 million in 2020, then rises steadily to a peak of US$31,383 million in 2023, before a slight decline to US$30,887 million in 2024. This suggests increased investment in the company's operational assets or business expansions with some stabilization in the final year.

Insights

The data indicates a strengthening equity base and relatively stable or diminishing debt levels, which could enhance the company's financial stability and creditworthiness. The upward movement in invested capital corresponds with the growth in equity, implying that the company is reinvesting funds to support expansion or operational capacity. The moderate decline in invested capital in the last period may suggest a phase of consolidation or optimization of asset deployment.

The financial data reveals distinct trends over the six-year period analyzed. Economic profit experienced considerable fluctuations. It started at a high level in 2019, then declined in 2020, surged significantly in 2021 and 2022, fell sharply in 2023, and recovered again in 2024 though not reaching the previous peak.

Invested capital generally increased over the years, with a notable dip in 2020. From 2019 to 2024, the value rose from around 21 billion US dollars to approximately 30.9 billion US dollars, indicating steady expansion in the company’s invested assets despite some variability.

The economic spread ratio paralleled the economic profit trend with fluctuations. It showed a high level in 2019 and 2020, increased markedly in 2021 and 2022, then dropped drastically in 2023, and partially recovered in 2024. The sharp decline in 2023 indicates a significant reduction in the return spread relative to invested capital during that year.

Economic Profit

Varied significantly, peaking in 2022 before a sharp drop in 2023 and partial recovery in 2024.

Invested Capital

Exhibited a consistent upward trend from 2019 through 2024, with a small decline noted in 2020.

Economic Spread Ratio

Followed volatility similar to economic profit, peaking in 2022, declining heavily in 2023, and rebounding somewhat in 2024.

Overall, the data indicates periods of strong profitability and increasing capital investment, interrupted by a significant downturn in economic profitability and spread ratio in 2023, followed by signs of recovery in 2024. This pattern suggests sensitivity in profitability metrics relative to invested capital, highlighting potential external or internal factors impacting financial performance predominantly in 2023.

The financial data over the six-year period reveals notable fluctuations and trends in economic profit, adjusted revenues, and economic profit margin.

Economic Profit

Economic profit shows a volatile pattern with an initial decline from 2707 million USD in 2019 to 1989 million USD in 2020. This is followed by a significant increase peaking at 8430 million USD in 2022. Subsequently, there is a sharp decline in 2023 to 784 million USD, before recovering again to 3107 million USD in 2024.

Adjusted Revenues

Adjusted revenues demonstrate an overall upward trajectory with some variability. Starting at 23878 million USD in 2019, there is a slight decrease in 2020 to 23135 million USD. This is followed by substantial growth through 2021 and 2022, peaking at 43737 million USD. In 2023, revenues decrease to 35699 million USD but partially recover to 38955 million USD in 2024.

Economic Profit Margin

The economic profit margin fluctuates considerably over the years. It begins at 11.33% in 2019 and declines to 8.6% in 2020. There is a marked increase to reach the highest margin of 19.27% in 2022, coinciding with the peak economic profit. However, it dramatically falls to 2.2% in 2023 and improves to 7.98% in 2024, indicating variable profitability relative to revenues.

Overall, despite growth phases especially between 2020 and 2022, the financial metrics exhibit significant volatility, reflecting fluctuating profitability and revenue streams. The sharp declines in 2023 across economic profit and margin warrant further investigation, while the partial recovery in 2024 demonstrates some resilience.