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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AT&T Inc. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Reportable Segments
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Selected Financial Data since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
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Economic Profit
AT&T Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial data reveals notable fluctuations in key performance indicators over the five-year period analyzed.
- Net Operating Profit After Taxes (NOPAT)
- There is significant volatility in NOPAT values. After a moderate amount of 4,489 million USD in 2020, NOPAT surged dramatically to 32,698 million USD in 2021 before dropping sharply to 1,500 million USD in 2022. It then rebounded to 22,742 million USD in 2023 and decreased to 18,826 million USD in 2024. This pattern suggests inconsistent profitability performance, possibly due to operational or market factors impacting earnings across these years.
- Cost of Capital
- The cost of capital percentage experienced minor fluctuations, ranging from approximately 6.89% to 8.34% over the period. It decreased slightly from 7.55% in 2020 to a low of 6.89% in 2021, then generally increased to 8.34% by 2024. This upward trend in the latter years may indicate increasing risk perceptions or changes in financing conditions.
- Invested Capital
- The invested capital showed a decreasing trend after peaking in 2021. Starting at 412,041 million USD in 2020, it rose to 439,195 million USD in 2021 but fell sharply to 309,447 million USD in 2022. It then slightly increased to 326,144 million USD in 2023, followed by a modest decline to 314,065 million USD in 2024. This overall reduction post-2021 may reflect divestitures, asset sales, or efficiency improvements in capital deployment.
- Economic Profit
- Economic profit values indicate persistent challenges in generating value beyond the cost of capital. Despite a positive economic profit of 2,443 million USD in 2021, the company experienced substantial negative economic profits in other years: negative 26,600 million USD in 2020, negative 21,642 million USD in 2022, nearly breakeven at negative 638 million USD in 2023, and again negative 7,361 million USD in 2024. These figures suggest that the company frequently failed to cover its capital costs, highlighting potential inefficiencies or competitive pressures.
Overall, the data portrays a company with unstable profitability and economic value creation. While NOPAT occasionally reached very high levels, the inconsistencies and recurring negative economic profits point to underlying challenges in sustaining profitable and efficient operations over this timeframe. The gradual increase in cost of capital coupled with declining invested capital after 2021 further contextualizes these difficulties in maintaining favorable capital structure and usage.
Net Operating Profit after Taxes (NOPAT)
AT&T Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for credit loss.
3 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to AT&T.
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income (loss) attributable to AT&T.
7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
9 Elimination of discontinued operations.
The financial data indicates notable fluctuations in profitability metrics over the five-year period.
- Net Income (Loss) Attributable to the Company
- The net income demonstrates significant volatility, beginning with a substantial loss of approximately 5,176 million US dollars at the end of 2020. This is followed by a sharp turnaround in 2021, with net income reaching an impressive 20,081 million US dollars. However, this positive result was not sustained, as net income reverted to a loss of around 8,524 million in 2022. Subsequently, the company recovered again with net income of 14,400 million in 2023, before experiencing a moderate decline to 10,948 million in 2024. The pattern suggests a cyclical or event-driven influence on profitability, with pronounced peaks and troughs.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibits a similar pattern of fluctuations, though trends show a stronger positive trajectory post-2020. Starting from 4,489 million in 2020, there was a notable surge to 32,698 million in 2021, reaching the peak value within the dataset. A sharp drop to 1,500 million follows in 2022, indicating substantial operational or performance challenges. Recovery is evident thereafter, with NOPAT climbing back to 22,742 million in 2023 and slightly declining to 18,826 million in 2024. These variations highlight periods of operational strength and weakness, indicating potential impacts from market conditions, restructuring, or other internal and external factors affecting operating efficiency and profitability.
Overall, both net income and NOPAT metrics reflect high volatility but suggest a capacity for rapid recovery following downturns. Despite these fluctuations, the company managed to maintain generally positive operating profitability from 2021 onwards, although net income was less consistent. The downward adjustments in the latest year indicate caution and emphasize the need to monitor ongoing financial performance and underlying factors driving the variability.
Cash Operating Taxes
AT&T Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Income Tax Expense
- The income tax expense shows a marked increase from 965 million US dollars in 2020 to a peak of 5,468 million US dollars in 2021. This sharp rise is followed by a decline to 3,780 million US dollars in 2022. Subsequently, the tax expense exhibits a gradual increase over the next two periods, reaching 4,445 million US dollars by the end of 2024. Overall, the trend highlights significant volatility with an initial surge, a drop, and then stabilization at a relatively high level compared to the starting point.
- Cash Operating Taxes
- Cash operating taxes present a steady upward trajectory throughout the analyzed period. The values begin at 1,602 million US dollars in 2020 and remain relatively stable into 2021 at 1,603 million US dollars. After this point, there is a substantial increase to 2,134 million US dollars in 2022, followed by a pronounced rise to 4,298 million US dollars in 2023 and further growth to 5,277 million US dollars in 2024. This consistent increase indicates growing cash tax payments, potentially reflecting heightened operational profitability or changes in tax regulation or payment timing.
- Comparative Observation
- Comparing both items, cash operating taxes have increased consistently every year following a plateau in the first two years, whereas income tax expense has shown more fluctuation. The disparity between income tax expense and cash operating taxes narrows over time, especially from 2023 onwards, suggesting a possible alignment between reported tax expenses and actual cash tax outflows in the most recent periods.
Invested Capital
AT&T Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
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 equity equivalents to stockholders’ equity attributable to AT&T.
5 Removal of accumulated other comprehensive income.
6 Subtraction of under construction.
7 Subtraction of investment securities.
- Total reported debt & leases
-
The total reported debt and leases showed an initial increase from 182,984 million USD in 2020 to 202,321 million USD in 2021, reflecting a rising leverage or financing need in that period. Subsequently, there was a marked decline to 158,096 million USD in 2022, which remained relatively stable in 2023 at 158,423 million USD before continuing to decrease to 144,456 million USD by the end of 2024. The overall trend from 2021 to 2024 indicates a strategic reduction in debt obligations, potentially aimed at deleveraging and improving financial stability.
- Stockholders’ equity attributable to AT&T
-
Stockholders' equity attributable to the company gradually increased from 161,673 million USD in 2020 to 166,332 million USD in 2021. However, a significant drop occurred in 2022, bringing equity down to 97,500 million USD. Following this decline, there was a modest recovery to 103,297 million USD in 2023 and a slight increase to 104,372 million USD in 2024. This decline in 2022 could signify a major event such as restructuring, asset revaluation, or other factors impacting retained earnings or equity components, with partial recovery in the subsequent years.
- Invested capital
-
Invested capital exhibited an upward trajectory from 412,041 million USD in 2020 to 439,195 million USD in 2021, suggesting an increase in capital investment or assets employed in operations. However, this was followed by a notable decrease to 309,447 million USD in 2022, partly recovering to 326,144 million USD in 2023 before decreasing again to 314,065 million USD in 2024. The fluctuations in invested capital closely mirror the changes in equity, indicating possible asset disposals, changes in working capital, or other operational adjustments that influenced the capital base over the period.
Cost of Capital
AT&T Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 5.000% Perpetual Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 4.750% Perpetual Preferred Stock, Series C | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 5.000% Perpetual Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 4.750% Perpetual Preferred Stock, Series C | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 5.000% Perpetual Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 4.750% Perpetual Preferred Stock, Series C | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 5.000% Perpetual Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 4.750% Perpetual Preferred Stock, Series C | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 5.000% Perpetual Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 4.750% Perpetual Preferred Stock, Series C | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
AT&T Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| T-Mobile US Inc. | ||||||
| Verizon Communications Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited significant fluctuations over the analyzed period. Initially, there was a substantial negative economic profit of -26,600 million US dollars at the end of 2020. This turned positive in 2021, reaching 2,443 million US dollars, indicating improved profitability. However, the trend reversed in the following years, with economic profit declining to -21,642 million in 2022, and remaining negative at -638 million in 2023 and -7,361 million in 2024. Overall, economic profit shows instability with predominant losses after 2021.
- Invested Capital
- Invested capital experienced an increase from 412,041 million US dollars in 2020 to 439,195 million in 2021, representing growth in capital deployment. However, a sharp decline occurred in 2022, with invested capital decreasing to 309,447 million. Subsequently, it showed moderate recovery and stabilization, with values of 326,144 million in 2023 and 314,065 million in 2024. The pattern suggests a strategic reduction in invested capital after 2021, with a more conservative or optimized capital base maintained thereafter.
- Economic Spread Ratio
- The economic spread ratio followed a pattern similar to economic profit, beginning with a negative spread of -6.46% in 2020. It briefly turned positive to 0.56% in 2021, corresponding to improved returns over cost of capital. Following this, the ratio fell sharply to -6.99% in 2022, followed by less negative spreads of -0.2% in 2023 and -2.34% in 2024. This indicates challenges in generating returns above the cost of capital for most years except 2021, with some improvement in the last two years but still negative performance.
- Overall Analysis
- The financial data indicates a volatile performance with a peak in financial effectiveness in 2021, where economic profit turned positive and the economic spread ratio indicated value creation. Both invested capital and economic profitability contracted substantially in 2022, suggesting possible impairments, divestitures, or restructuring. Despite attempts at stabilization in capital investment and economic spread from 2023 onward, profitability remains below the cost of capital. The persistent negative economic profit implies challenges in generating sustainable economic value.
Economic Profit Margin
AT&T Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Operating revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| T-Mobile US Inc. | ||||||
| Verizon Communications Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Operating revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit shows significant fluctuations over the analyzed periods. It starts with a substantial negative value in 2020, then improves markedly to a positive figure in 2021. However, this improvement is short-lived as economic profit falls sharply again in 2022, becoming highly negative. The years 2023 and 2024 show a trend of reduction in negative economic profit compared to 2022, but values remain below zero, indicating ongoing challenges in generating economic profit.
- Operating Revenues
- Operating revenues experience a notable decrease from 2020 to 2022, dropping significantly by nearly 49,000 million US dollars. Following this decline, revenues stabilize around the 122,000 million US dollar mark in 2023 and 2024, showing limited growth or recovery during these years.
- Economic Profit Margin
- The economic profit margin displays a pattern similar to that of economic profit. It moves from a negative margin in 2020 to a small positive margin in 2021, indicating improved profitability efficiency. This positive margin retreats sharply in 2022 to its lowest point in the period, then partially recovers in 2023 and 2024, though it stays in negative territory. This trend suggests persistent inefficiencies or cost pressures affecting profitability despite stabilized revenues.