Walgreens Boots Alliance Inc. (NASDAQ:WBA)

The financial data reveals several trends regarding profitability, invested capital, and efficiency over the six-year period ending in August 2019.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibited an overall growth pattern, starting at 3,086 million US dollars in 2014 and peaking at 5,934 million US dollars in 2018. Despite a slight decline to 5,719 million US dollars in 2019, the general trend indicates improved profitability, with an almost doubling of NOPAT over the period.

Invested Capital

Invested capital increased markedly from 55,001 million US dollars in 2014 to a high of 85,356 million US dollars in 2016. Thereafter, it declined to 76,286 million by 2018, with a modest increase to 77,429 million in 2019. This fluctuation suggests changes in asset base or capital allocation strategies, with a reduction following 2016 before stabilizing.

Return on Invested Capital (ROIC)

The ROIC percentage progressed gradually, beginning at 5.61% in 2014 and increasing to a peak of 7.78% in 2018, before a slight decrease to 7.39% in 2019. This pattern shows improved capital efficiency and profitability relative to invested capital, aligning closely with the trends observed in NOPAT and invested capital.

In summary, the company demonstrated growth in operating profit and improved returns on invested capital, despite fluctuations in the invested capital base itself. The highest returns and profits occurred around 2018, with marginal declines in the subsequent year, suggesting a period of strong financial performance with some recent moderation.

The analysis of the financial metrics over the six-year period reveals several important trends and shifts in performance.

Operating Profit Margin (OPM)

The operating profit margin shows a fluctuating but overall declining trend from 6.27% in 2014 to 4.79% in 2019. The margin peaked at 6.93% in 2015 before experiencing a general decline, indicating a potential compression in profitability from core operations over the period.

Turnover of Capital (TO)

This metric depicts a generally positive trajectory, increasing from 1.39 in 2014 to 1.77 in 2019. The upward trend reflects improved efficiency in utilizing capital assets to generate revenue, with notable incremental rises especially after 2016.

1 – Effective Cash Tax Rate (CTR)

The value representing 1 minus the effective cash tax rate exhibits a marked increase from 64.39% in 2014 to 87.31% in 2019. This indicates a rising burden of cash taxes over time, with the firm retaining less income after tax obligations in cash terms, potentially impacting net profitability.

Return on Invested Capital (ROIC)

Return on invested capital showed significant variability but generally improved, rising from 5.61% in 2014 to a high of 7.78% in 2018 before a slight decline to 7.39% in 2019. This suggests enhanced overall returns from invested capital despite pressures observed in operating margins and tax rates.

Overall, while operational profitability margins experienced some pressure, the company's effectiveness in capital use and ability to generate returns on investments generally improved. The increased effective cash tax rate suggests growing cash tax liabilities, which may somewhat offset gains from improved capital turnover and returns. These dynamics highlight an environment of evolving operational efficiency and tax challenges impacting overall financial performance.

The financial data over the six-year period reveals several notable trends in profitability and sales performance. Sales exhibit a consistent upward trajectory from 76,392 million US dollars in 2014 to 136,866 million US dollars in 2019. This steady increase reflects ongoing growth in the company's revenue-generating capacity.

Net operating profit before taxes (NOPBT) follows a less straightforward pattern. Starting at 4,792 million US dollars in 2014, it climbs significantly to 7,167 million in 2015, suggesting improved operational efficiency or favorable conditions during that year. However, from 2016 onwards, NOPBT shows volatility, declining to 6,711 million in 2016, slightly rebounding to 7,013 million in 2017, peaking again at 7,657 million in 2018, before dropping sharply to 6,550 million in 2019. This fluctuation indicates varying operational challenges or changes in cost structures impacting profitability.

The operating profit margin (OPM) percentage declines overall despite increasing sales. OPM rises from 6.27% in 2014 to a peak of 6.93% in 2015, aligning with the initial NOPBT growth. However, from 2016 through 2019, it exhibits a continuous downward trend, falling to 4.79% by 2019. This decline in margin suggests that although sales are growing, the company is experiencing reduced efficiency in converting sales into operating profit, which may be due to increased costs, pricing pressures, or investments affecting operational expenses.

In summary, the data portrays a company achieving significant sales growth over the period but facing challenges in maintaining stable and improving operating profitability. The divergence between rising sales and declining operating profit margin underlines the importance of focusing on cost management and operational efficiencies.

The financial data reflects the operational performance and capital efficiency over a six-year period. Sales exhibited a generally upward trajectory, increasing from 76,392 million US dollars in 2014 to 136,866 million US dollars in 2019. This represents significant growth in revenue, with a particularly notable jump between 2014 and 2015, and a more moderate pace of increase in subsequent years.

Invested capital followed a different pattern. Starting at 55,001 million US dollars in 2014, it rose sharply to 80,730 million US dollars in 2015, indicating a substantial increase in capital investment that year. After 2015, invested capital trends showed slight fluctuations, with a decrease in 2017 and 2018, settling around 77,429 million US dollars by 2019. This suggests a period of capital consolidation or optimization after initial expansion.

The turnover of capital ratio provides insight into how effectively the company uses its invested capital to generate sales. This ratio declined from 1.39 in 2014 to 1.28 in 2015, reflecting the rapid increase in invested capital relative to sales growth that year. However, from 2016 onwards, the turnover ratio improved steadily to 1.77 in 2019, indicating enhanced capital efficiency. This improvement aligns with stabilization and slight reduction in invested capital alongside continuous sales growth.

Sales

Consistent growth across all periods, nearly doubling from 2014 to 2019.

Invested Capital

Sharp increase in 2015 followed by relative stabilization and minor declines.

Turnover of Capital

Initial decline in 2015 due to surge in invested capital, then steady increase indicating improved capital utilization.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes demonstrates variability over the analyzed period. Starting at 4,792 million USD in 2014, the figure increased significantly to 7,167 million USD in 2015. Subsequently, it declined to 6,711 million USD in 2016, rose again to 7,013 million USD in 2017, peaked at 7,657 million USD in 2018, and then fell to 6,550 million USD in 2019. This pattern reflects fluctuations in operational efficiency or external market conditions influencing profit generation.

Cash Operating Taxes

Cash operating taxes exhibited a general downward trend over the six-year span. After a slight decrease from 1,707 million USD in 2014 to 1,667 million USD in 2015, taxes rose moderately to 1,856 million USD in 2016. Subsequently, they showed a gradual decline from 1,767 million USD in 2017 to 1,723 million USD in 2018, followed by a sharp drop to 831 million USD in 2019. The notable reduction in 2019 suggests possible changes in tax planning, tax policy, or operating profitability impacting the tax burden.

Effective Cash Tax Rate (CTR)

The effective cash tax rate decreased steadily throughout the period. Starting at 35.61% in 2014, the rate declined substantially to 23.25% in 2015. It then fluctuated moderately, reaching 27.66% in 2016 and dropping to 25.19% in 2017, followed by a further decrease to 22.5% in 2018. In 2019, the tax rate reached its lowest point at 12.69%. This persistent decline in the effective tax rate may indicate increasing tax efficiency, utilization of tax credits, or structural changes in the company’s tax strategy.