Qualcomm Inc. (NASDAQ:QCOM)

Net Operating Profit After Taxes (NOPAT)

The NOPAT experienced fluctuations over the period. It declined from 5963 million USD in 2019 to 4798 million USD in 2020, followed by a significant increase reaching a peak of 13145 million USD in 2022. However, this was followed by a sharp decline in 2023 to 5865 million USD, with a recovery to 8262 million USD in 2024. The variability suggests periods of both strong operational performance and challenges.

Cost of Capital

The cost of capital showed a gradual increasing trend from 15.19% in 2019 to 16.41% in 2024. The incremental rise over the years indicates a slightly increasing risk or higher expected returns demanded by investors, which could impact investment decisions and valuation metrics.

Invested Capital

Invested capital decreased from 21089 million USD in 2019 to 17459 million USD in 2020, then increased steadily to reach a high of 31383 million USD in 2023 before a marginal decrease to 30887 million USD in 2024. This trend suggests a substantial increase in capital deployment to support growth or operational scale-up, especially evident after 2020.

Economic Profit

Economic profit mirrored the trends in NOPAT with variability across years. It dropped from 2760 million USD in 2019 to 2035 million USD in 2020, followed by steady and substantial increases to a peak of 8508 million USD in 2022. However, economic profit sharply declined to 868 million USD in 2023 before rebounding to 3192 million USD in 2024. The fluctuations indicate changes in value creation relative to the cost of capital and invested capital.

Overall Analysis

The data reveals a pattern of considerable volatility in operational profitability and economic profit, with peaks around 2021 and 2022, followed by downturns in 2023 and partial recovery in 2024. Invested capital expanded significantly from 2020 onwards, suggesting increased investment possibly aimed at growth or capacity enhancements. The rising cost of capital may have exerted pressure on the valuation and economic profit, particularly visible in the decreases observed in 2023. These patterns point to a dynamic operational environment with periods of strong financial performance intertwined with challenges affecting profitability and value creation.

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.

Economic Profit

The economic profit demonstrates considerable volatility over the observed periods. After a decline from 2,760 million US dollars in 2019 to 2,035 million in 2020, it shows a sharp increase to 5,323 million in 2021 and peaks at 8,508 million in 2022. However, this peak is followed by a significant drop to 868 million in 2023, with a partial recovery to 3,192 million in 2024. This pattern indicates fluctuations in the company's ability to generate returns above its cost of capital.

Invested Capital

Invested capital varies over the years with an initial decrease from 21,089 million US dollars in 2019 to 17,459 million in 2020. Subsequently, there is a general upward trend, increasing to 20,003 million in 2021 and rising sharply to 29,132 million in 2022. This trend continues slightly upward to 31,383 million in 2023, followed by a modest decrease to 30,887 million in 2024. The growth in invested capital suggests expansions or increased investments, particularly noticeable from 2021 to 2023.

Economic Spread Ratio

The economic spread ratio exhibits significant fluctuations consistent with the trends in economic profit. It starts at 13.09% in 2019, declines slightly to 11.65% in 2020, then rises sharply to 26.61% in 2021 and 29.2% in 2022. A sharp decline to 2.76% is observed in 2023, indicating compression in spread, followed by a recovery to 10.34% in 2024. This ratio reflects changes in profitability relative to the invested capital and cost of capital, highlighting periods of higher and lower economic value creation.

Overall Analysis

The data presents a financial profile marked by volatility in economic profit and economic spread ratio, juxtaposed with a general increase in invested capital over the long term. The company experienced marked growth in economic profit and spread during 2021 and 2022, which sharply reversed in 2023 before showing partial recovery in 2024. The invested capital's expansion during these years implies investment in assets, which may have contributed to profit growth and subsequent fluctuations. The significant changes in economic spread underscore shifting efficiency or market conditions impacting returns on the invested capital.

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

Economic Profit

Economic profit displayed considerable fluctuations across the periods. It decreased notably from 2,760 million US$ in 2019 to 2,035 million US$ in 2020, followed by a significant increase to 5,323 million US$ in 2021 and further growth to 8,508 million US$ in 2022. However, there was a sharp decline to 868 million US$ in 2023 before rebounding to 3,192 million US$ in 2024. This pattern indicates variability in profitability, with peak performance in 2022 and a strong recovery following the downturn in 2023.

Adjusted Revenues

Adjusted revenues exhibited an overall upward trajectory. Starting at 23,878 million US$ in 2019, they slightly dropped to 23,135 million US$ in 2020. From there, revenues showed substantial growth, climbing to 33,213 million US$ in 2021 and 43,737 million US$ in 2022. A contraction occurred in 2023, where revenues decreased to 35,699 million US$, but a modest increase to 38,955 million US$ was recorded in 2024. The general trend highlights growth with some volatility, particularly the downturn in 2023.

Economic Profit Margin

The economic profit margin followed a pattern paralleling economic profit movements. It began at 11.56% in 2019 and declined to 8.79% in 2020. It then increased sharply to 16.03% in 2021 and reached its highest point at 19.45% in 2022. Subsequently, the margin fell drastically to 2.43% in 2023 before recovering to 8.2% in 2024. This variation implies fluctuating efficiency in translating revenue into economic profit, with a notable dip in 2023 that corresponds with the decrease in both profit and revenue.

In summary, the data reflects a period of growth and peak financial performance culminating around 2022, followed by a downturn in 2023 affecting all key metrics, and a partial recovery in 2024. The volatility in economic profit and its margin relative to adjusted revenues suggests external or internal factors impacting profitability and operational efficiency during the recent years.