Walgreens Boots Alliance Inc. (NASDAQ:WBA)

The financial data reveals several notable trends over the six-year period regarding key performance indicators.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibited a substantial increase from 2014 to 2015, rising from $3,086 million to $5,501 million. However, in 2016 there was a decline to $4,855 million, followed by a recovery trend peaking at $5,934 million in 2018. The figure then decreased slightly to $5,719 million in 2019. Overall, despite fluctuations, the NOPAT level in 2019 remained significantly higher than in 2014.

Cost of Capital

The cost of capital showed moderate variability throughout the period. It started at 9.74% in 2014, rose to a peak of 10.15% in 2015, and generally declined in the following years, reaching its lowest point at 8.75% in 2019. This downward trend in the cost of capital towards the end of the period could indicate improved financing conditions or a change in risk profile.

Invested Capital

Invested capital increased markedly from $55,001 million in 2014 to $80,730 million in 2015 and further to $85,356 million in 2016, indicating possibly significant investments or acquisitions during this timeframe. However, after 2016, invested capital decreased to $76,485 million in 2017 and remained relatively stable around $76,000 to $77,000 million through 2019, suggesting a period of consolidation or limited capital deployment.

Economic Profit

The economic profit was negative throughout the entire period, indicating the company did not generate returns above its cost of capital. The deficit widened from -$2,274 million in 2014 to a low of -$3,560 million in 2016. Subsequently, economic loss progressively decreased, improving to -$1,055 million by 2019. This improvement suggests enhanced operational efficiency or better capital utilization, although positive economic profit was not achieved.

In summary, while the company demonstrated growth in net operating profits with some volatility, it faced challenges in generating economic profit, consistently experiencing returns below its cost of capital. The decline in cost of capital combined with stable invested capital in recent years may provide a foundation for improving economic outcomes going forward.

Net earnings attributable to Walgreens Boots Alliance, Inc.

The net earnings exhibit volatility over the six-year period. Starting at 1,932 million USD in 2014, there is a significant increase to 4,220 million USD in 2015. This level is mostly sustained through 2016 and 2017, with values of 4,173 and 4,078 million USD respectively. In 2018, net earnings peak at 5,024 million USD, marking the highest point in the period analyzed. However, a decline occurs in 2019, where earnings fall to 3,982 million USD, indicating a downward shift after the 2018 peak.

Net operating profit after taxes (NOPAT)

The NOPAT shows an overall upward trend with some fluctuations. Beginning at 3,086 million USD in 2014, it rises sharply to 5,501 million USD in 2015. After this peak, it dips to 4,855 million USD in 2016, before increasing again in 2017 and 2018 to 5,246 and 5,934 million USD respectively. The highest NOPAT value is recorded in 2018. In 2019, NOPAT slightly decreases to 5,719 million USD but remains close to the peak level, indicating relatively stable operating profitability in recent years compared to net earnings.

Income Tax Provision

The income tax provision exhibited a general downward trend from 2014 to 2019. Beginning at $1,526 million in 2014, the figure decreased steadily through subsequent years, reaching $588 million in 2019. Notably, the most significant decline occurred between 2017 and 2019.

Cash Operating Taxes

Cash operating taxes remained relatively stable between 2014 and 2018, fluctuating within a narrow range from $1,667 million to $1,856 million. However, in 2019, there was a sharp decrease to $831 million, which represents a substantial reduction compared to the previous years.

Overall Observations

Both income tax provision and cash operating taxes showed significant declines by 2019 compared to earlier periods. While income tax provision steadily decreased over the years, cash operating taxes were stable for several years before dropping markedly in the last year observed. These trends may reflect changes in tax policies, operational adjustments, or shifts in taxable income and cash tax payments.

The financial data reveals several notable trends concerning the company's capital structure and invested capital over the six-year period ending in 2019.

Total reported debt & leases

This figure shows an overall increasing trend from 31,909 million USD in 2014 to 43,464 million USD in 2019, with a peak at 46,508 million USD in 2016. After reaching this peak, there is a decline in 2017 to 39,129 million USD, followed by a gradual increase again through 2018 and 2019. This pattern suggests a significant increase in leveraging activities up to 2016, some deleveraging or repayment in 2017, and subsequent additional borrowings or lease liabilities through 2019.

Total shareholders’ equity

Shareholders' equity exhibits a declining trend over the period. Starting at 20,457 million USD in 2014, the equity rose sharply to 30,861 million USD in 2015 but then continuously decreased each year thereafter to 23,512 million USD by 2019. This reduction over time indicates a depletion of equity capital, which could be attributed to factors such as sustained net losses, dividend distributions exceeding net income, share repurchases, or other equity-reducing activities.

Invested capital

The invested capital closely aligns with the combined effect of debt and equity, representing the total capital used in operations. It increased substantially from 55,001 million USD in 2014 to a peak of 85,356 million USD in 2016. Following this peak, invested capital decreased to 76,485 million USD in 2017 and remained relatively stable, with a slight increase, reaching 77,429 million USD by 2019. This behavior suggests expansion or acquisition activity up to 2016, followed by a period of consolidation or capital optimization in subsequent years.

In summary, the company experienced considerable growth in debt financing and invested capital until 2016, accompanied by an initial rise and then a steady decline in shareholders' equity. The data implies a strategic shift post-2016, characterized by deleveraging and stabilization of invested capital, while equity erosion continued, highlighting potential risks related to capital structure and financial sustainability.

Economic Profit

Economic profit consistently remained negative throughout the analyzed period, indicating the company's inability to generate returns above its cost of capital. The deficit deepened from -2,274 million USD in 2014 to a peak of -3,560 million USD in 2016, followed by a gradual improvement, reducing to -1,055 million USD by 2019. This trend suggests an initial deterioration in value creation capability with a subsequent recovery phase, although profitability remained below expectations.

Invested Capital

Invested capital showed an overall increasing trend from 55,001 million USD in 2014 to 85,356 million USD in 2016, reflecting substantial investment growth. However, capital declined in 2017 to 76,485 million USD and stabilized around 76,286 to 77,429 million USD in subsequent years. This pattern indicates an expansion phase up to 2016, followed by a consolidation or strategic withdrawal period.

Economic Spread Ratio

The economic spread ratio consistently exhibited negative values over the period, starting at -4.13% in 2014 and showing some fluctuation, reaching the lowest point of -4.17% in 2016. Thereafter, the ratio improved steadily to -1.36% by 2019. Despite this improvement, the negative spread throughout denotes that returns generated were consistently below the cost of capital, although the narrowing gap indicates progress in operational efficiency or cost management.

Sales

There is a clear upward trend in sales over the six-year period. Sales increased steadily from 76,392 million US dollars in 2014 to 136,866 million US dollars in 2019. This represents a significant growth in revenue, with the most substantial year-over-year increases occurring between 2014 and 2015, and again from 2017 to 2018.

Economic Profit

The economic profit values are negative throughout the period, indicating consistent economic losses. Although the company did not achieve positive economic profit at any point, there is an improving trend from 2016 onwards. The economic loss decreased from -3,560 million US dollars in 2016 to -1,055 million US dollars in 2019, reflecting better cost management or improved operational efficiency.

Economic Profit Margin

The economic profit margin remains negative for all years, which corresponds to the negative economic profit values. The margin improved from -2.98% in 2014 to -0.77% in 2019, indicating a gradual reduction in losses relative to sales. Despite this improvement, the company has yet to reach profitability on an economic profit margin basis, but the trend suggests progress towards reducing losses relative to revenue generation.

Overall Analysis

The data indicates that while sales have grown considerably, economic profit remains negative, though improving. The reduction in economic losses in absolute terms and the narrowing negative margin suggest enhancements in operational leverage or cost structure. Continued focus on converting growing sales into positive economic profit would be critical to ensure sustainable financial health.