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.
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- Income Statement
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Debt to Equity since 2015
- Price to Sales (P/S) since 2015
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Economic Profit
SolarEdge Technologies Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes (NOPAT) experienced fluctuations over the five-year period. Starting at approximately $203.9 million in 2018, NOPAT increased notably in 2019 to nearly $279.0 million. However, there was a significant decline in 2020, dropping to $154.6 million. The figure improved again in 2021 to about $253.5 million, but slightly decreased in 2022 to $249.9 million. Overall, NOPAT exhibited volatility with a peak in 2019 and some recovery after the 2020 downturn.
- Cost of Capital
- The cost of capital remained relatively stable throughout the period, fluctuating narrowly between approximately 16.96% and 17.99%. The highest cost of capital was observed in 2019 at 17.99%, followed by a gradual decline to 16.96% in 2021, and a slight increase again to 17.16% in 2022. This stability indicates consistent capital expense conditions for the company during these years.
- Invested Capital
- Invested capital showed a strong upward trend over the period, increasing more than fourfold from about $559.3 million in 2018 to $2.61 billion by the end of 2022. The most significant increase occurred between 2019 and 2020, where invested capital nearly doubled from $909.8 million to $1.73 billion. Although there was a slight decrease in 2021 to $1.70 billion, the figure surged again in 2022 to its highest point. This expansion suggests considerable reinvestment or asset growth within the company.
- Economic Profit
- Economic profit demonstrated a declining trajectory during the analyzed timeframe. Positive economic profit was maintained in 2018 and 2019, at approximately $103.5 million and $115.3 million, respectively. However, a sharp turnaround occurred in 2020, resulting in a negative economic profit of about -$144.0 million. This negative trend continued in subsequent years, with economic losses of -$34.8 million in 2021 and further worsening to -$197.8 million in 2022. Despite growth in invested capital and fluctuating NOPAT, economic profit declined, indicating that returns did not sufficiently exceed the cost of capital over the latter part of the period.
Net Operating Profit after Taxes (NOPAT)
SolarEdge Technologies Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for credit losses.
3 Addition of increase (decrease) in deferred revenues.
4 Addition of increase (decrease) in warranty obligations.
5 Addition of increase (decrease) in equity equivalents to net income attributable to SolarEdge Technologies, Inc..
6 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2022 Calculation
Tax benefit of interest expenses = Adjusted interest expenses × Statutory income tax rate
= × 21.00% =
8 Addition of after taxes interest expense to net income attributable to SolarEdge Technologies, Inc..
9 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
10 Elimination of after taxes investment income.
- Net income attributable to SolarEdge Technologies, Inc.
- The net income exhibited growth from 2018 to 2019, increasing from approximately $128.8 million to $146.5 million. However, in 2020, net income slightly declined to about $140.3 million, indicating a minor setback. The figure rebounded in 2021 to reach a peak of approximately $169.2 million, representing the highest value in the five-year span. In contrast, 2022 saw a significant drop to around $93.8 million, a sharp decrease compared to the preceding year, signaling a potential issue or challenge impacting profitability in the most recent period.
- Net operating profit after taxes (NOPAT)
- NOPAT showed notable volatility over the five years. Initially, it rose significantly from about $203.9 million in 2018 to nearly $279.0 million in 2019, demonstrating strong operational performance improvement. A substantial decline occurred in 2020, with NOPAT decreasing to approximately $154.6 million, indicating operational difficulties or increased expenses. Recovery was observed in 2021, with NOPAT climbing back to approximately $253.5 million, nearing prior peak levels. In 2022, NOPAT remained relatively stable, slightly decreasing to about $249.9 million, suggesting that operational efficiency was maintained despite fluctuations in net income.
Cash Operating Taxes
SolarEdge Technologies Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Income Taxes, Net
- The net income taxes exhibit a fluctuating trend over the five-year period. Beginning at 9,077 thousand US dollars in 2018, there was a significant increase to 33,646 thousand US dollars in 2019. This was followed by a decline to 23,344 thousand US dollars in 2020 and a further decrease to 18,054 thousand US dollars in 2021. However, the figure surged noticeably in 2022 to 83,376 thousand US dollars, indicating a substantial rise compared to prior years.
- Cash Operating Taxes
- The cash operating taxes also show variability with a generally increasing trend. Starting at 15,810 thousand US dollars in 2018, the amount more than doubled to 40,084 thousand US dollars in 2019. There was a decrease to 28,279 thousand US dollars in 2020, followed by a slight increase to 31,486 thousand US dollars in 2021. In 2022, cash operating taxes rose sharply to 95,076 thousand US dollars, marking the highest value within the observed period.
- Overall Insights
- Both income taxes, net and cash operating taxes demonstrate significant volatility but ultimately culminate in marked increases in 2022. The spike in tax figures during 2022 could suggest improved profitability, changes in tax regulations, or accumulation of deferred tax liabilities. The patterns also indicate that cash operating taxes consistently remain higher than net income taxes, reflecting differences potentially due to timing and tax accounting adjustments.
Invested Capital
SolarEdge Technologies Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
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 revenues.
5 Addition of warranty obligations.
6 Addition of equity equivalents to total SolarEdge Technologies, Inc. stockholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of assets under construction and payments on account.
9 Subtraction of marketable securities.
- Total reported debt & leases
- The total reported debt and leases exhibit a significant upward trend over the analyzed period. Starting from approximately 19.8 million in 2018, the figure more than doubles to around 42.4 million in 2019. This upward trajectory accelerates sharply in 2020, reaching approximately 647.4 million, followed by continued increases in 2021 and 2022 to roughly 715.6 million and 735.5 million, respectively. This pattern indicates an aggressive increase in debt and lease obligations, particularly notable between 2019 and 2020.
- Total SolarEdge Technologies, Inc. stockholders’ equity
- Stockholders’ equity demonstrates consistent and robust growth throughout the period. It starts at approximately 562.4 million in 2018 and grows steadily year-over-year, reaching about 811.7 million in 2019 and 1.09 billion in 2020. The growth continues to strengthen, with equity reaching around 1.31 billion in 2021 and showing a substantial increase to approximately 2.18 billion in 2022. This indicates a strengthening equity base, which may reflect retained earnings growth, capital contributions, or a combination thereof.
- Invested capital
- Invested capital displays a marked upward movement over the observed years. Beginning at approximately 559.3 million in 2018, it rises sharply to about 909.8 million in 2019. The growth is especially pronounced in 2020, reaching approximately 1.73 billion. This figure remains relatively stable in 2021 at roughly 1.70 billion before surging again to approximately 2.61 billion in 2022. The overall increase in invested capital aligns with the increases observed in both debt and equity, suggesting expansion in the company’s capital base.
- Summary of Trends
- The data reveal a pattern of significant financial growth and expansion over the five-year period. Both debt and equity have increased substantially, with debt experiencing a very sharp rise from 2019 onwards. The growth in stockholders’ equity is steady and strong, culminating in a considerable increase in 2022. Correspondingly, invested capital has also significantly increased, reflecting the combined effects of higher equity and debt. The company appears to be leveraging additional debt alongside equity financing to support its investment growth, which may indicate strategic expansion efforts or increased operational scale.
Cost of Capital
SolarEdge Technologies Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Convertible senior notes and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible senior notes and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Convertible senior notes and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible senior notes and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Convertible senior notes and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible senior notes and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Convertible senior notes and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible senior notes and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Convertible senior notes and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible senior notes and finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
SolarEdge Technologies Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit demonstrated a declining trend over the observed periods. Starting at a positive value of 103,541 thousand USD in 2018, it increased modestly to 115,327 thousand USD in 2019. However, from 2020 onwards, the economic profit turned negative, registering a significant loss of 144,023 thousand USD in 2020. This negative trend persisted in 2021 and 2022, with losses of 34,846 and 197,842 thousand USD respectively, indicating deteriorating profitability.
- Invested Capital
- Invested capital showed a consistent upward trend throughout the years. Beginning at 559,312 thousand USD in 2018, it rose sharply to 909,829 thousand USD in 2019. The growth accelerated further in 2020 to 1,734,649 thousand USD and remained relatively stable in 2021 at 1,700,638 thousand USD. In 2022, invested capital reached its highest point at 2,608,920 thousand USD, reflecting substantial capital accumulation over the period.
- Economic Spread Ratio
- The economic spread ratio followed a declining trajectory across the five years. It started from a relatively high positive figure of 18.51% in 2018, and then decreased to 12.68% in 2019. From 2020 onwards, the ratio turned negative, indicating returns below the cost of capital. Specifically, the ratio was -8.3% in 2020, improved slightly to -2.05% in 2021, and then worsened again to -7.58% in 2022, suggesting ongoing challenges in generating adequate returns on invested capital.
Economic Profit Margin
SolarEdge Technologies Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenues | ||||||
| Adjusted revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Economic profit. See details »
2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Adjusted Revenues
- The adjusted revenues displayed a consistent upward trajectory throughout the five-year period. Starting at approximately $978 million in 2018, revenues increased significantly to about $1.51 billion in 2019. Despite a slight dip in 2020 to roughly $1.44 billion, the revenue rebounded strongly in subsequent years, reaching approximately $1.99 billion in 2021 and further surging to about $3.15 billion by the end of 2022. This overall growth indicates robust top-line expansion over the period.
- Economic Profit
- The economic profit followed a markedly different trend compared to revenues. In 2018 and 2019, the company generated positive economic profits of $103.5 million and $115.3 million respectively, showing profitable operational performance. However, from 2020 onwards, the economic profit turned negative, with a substantial loss of $144 million recorded in 2020. Although the losses decreased in 2021 to about $34.8 million, the economic profit deteriorated sharply again in 2022 to a negative $197.8 million. This shift signals a growing gap between operating costs and returns over the latter years, despite revenue growth.
- Economic Profit Margin
- The economic profit margin, reflecting the ratio of economic profit to revenues, declined significantly over the period. It started strong in 2018 at 10.58%, decreasing to 7.63% in 2019. Subsequently, the margin turned negative in 2020, reaching -10.01%, and although the loss margin slightly improved to -1.75% in 2021, it worsened again to -6.27% in 2022. The negative margins in recent years emphasize the increasing inefficiency or elevated costs relative to revenue, negatively impacting overall profitability.
- Summary
- While adjusted revenues demonstrated substantial growth from 2018 to 2022, the economic profit and its margin revealed a contrasting pattern marked by a significant deterioration starting in 2020. The initial positive economic profit years indicate effective profitability management early on, but the subsequent negative economic profits and margins suggest mounting challenges in converting revenue growth into economic value. This divergence highlights potential issues such as increased costs, operational inefficiencies, or strategic investments not yet yielding a positive return. The trends call for a closer examination of cost structures and profitability drivers to realign financial performance with the expanding revenue base.