Becton, Dickinson & Co. (NYSE:BDX)

Net operating profit after taxes (NOPAT)

The NOPAT values display considerable volatility over the observed periods. Starting at 717 million US dollars in 2016, there was a significant increase to 1300 million in 2017 followed by a sharp decline to 570 million in 2018. Subsequently, the figure rose again to 1105 million in 2019, experienced a slight decrease to 991 million in 2020, and then increased substantially to 2155 million in 2021. Overall, despite fluctuations, there is a notable upward movement by the end of the period.

Cost of capital

The cost of capital exhibits relatively minor changes over the years, beginning at 9.65% in 2016 and generally increasing. It slightly decreased in 2017 to 9.27%, then gradually increased through the following years, reaching 9.9% in 2021. The trend indicates a marginal rise in the cost of capital over the time frame.

Invested capital

Invested capital shows a marked upward trend from 2016 to 2018, increasing from 22,258 million US dollars to 47,282 million US dollars. However, after peaking in 2018, invested capital declined slightly to 45,181 million in 2019 and fluctuated around that level, with 46,312 million in 2020 and 45,278 million in 2021. The data suggests a significant build-up of invested capital in the first three years followed by relative stabilization.

Economic profit

Economic profit records negative values consistently throughout the period, indicating the company did not generate returns above its cost of capital. The losses deepened from -1,431 million in 2016 to a trough of -3,950 million in 2018. Although economic profit remained negative subsequently, it improved somewhat in later years, reaching -2,327 million in 2021. The persistent negative economic profit signals ongoing challenges in creating shareholder value despite growing operating profits.

Summary of insights

The company experienced significant fluctuations in operating profitability alongside increases in invested capital. Despite growth in NOPAT by the end of the period, economic profit stayed negative, reflecting that returns did not meet the cost of capital consistently. The cost of capital increased slightly, which could have contributed to the negative economic profit trend. Investment levels rose markedly early on and then stabilized, but the company struggled to convert this capital into value above its cost requirement. This situation highlights a need to improve operational efficiency or capital allocation to enhance economic profitability.

Net Income

The net income figures exhibit considerable fluctuation over the reported periods. Starting at 976 million US dollars in 2016, it increased moderately to 1100 million in 2017. However, 2018 saw a sharp decline to 311 million, representing a significant downturn. This was followed by a strong recovery in 2019, where net income rose to 1233 million. A decline occurred again in 2020, as net income dropped to 874 million. The latest figure in 2021 indicates a substantial increase to 2092 million, marking the highest value in the dataset and demonstrating a notable overall upward trend despite earlier volatility.

Net Operating Profit After Taxes (NOPAT)

NOPAT trends are somewhat aligned with net income, but they reflect less volatility. It started at 717 million US dollars in 2016 and sharply increased to 1300 million in 2017, marking a significant improvement. In 2018, NOPAT declined to 570 million, though this drop was less severe in relative terms compared to the net income decline in the same year. Subsequently, NOPAT recovered to 1105 million in 2019 and saw a slight decrease to 991 million in 2020. The year 2021 shows a dramatic increase to 2155 million, the highest point in the period, underscoring strong operational profitability improvements.

Summary Insights

Both net income and NOPAT demonstrate cyclical patterns characterized by steep declines followed by significant recoveries. The year 2018 stands out as an outlier with notably lower profitability, suggesting possible operational or market challenges during that period. The firm’s overall financial performance shows strong resilience and upward momentum by 2021, indicating effective management of costs and revenue growth leading to enhanced profitability. The 2021 figures exceeding previous highs imply robust financial health and operational efficiency.

The financial data reveals significant fluctuations in the income tax provision (benefit) over the observed periods. Initially, the income tax provision shows a negative value in 2017 (-124 million USD), indicating a benefit rather than an expense. This contrasts with the positive provisions in 2016 (97 million USD) and the substantial increase to 862 million USD in 2018. The value dips again in 2019 to a negative figure (-57 million USD), signaling another tax benefit, followed by a recovery to positive values in 2020 and 2021, reaching 111 million USD and 150 million USD, respectively. This volatility suggests variability in taxable income or tax planning strategies affecting provisions for income taxes.

Cash operating taxes also exhibit variability but with somewhat less drastic changes. The cash tax payment starts at 748 million USD in 2016, sharply decreases to 109 million USD in 2017, then peaks dramatically at 1,285 million USD in 2018. After this peak, there is a decline to 711 million USD in 2019, followed by further decreases and stabilization around 508 million USD in 2020, and a slight increase to 537 million USD in 2021. This pattern may reflect changes in operational profitability, timing differences in tax payments, or varying tax obligations year over year.

Income Tax Provision (Benefit)

Displayed considerable volatility with alternating positive and negative values, suggesting fluctuations in reported taxable income or tax expense recognition.

Peak observed in 2018, with a significant tax expense recorded.

Negative values in 2017 and 2019 suggest periods where tax benefits or credits were recognized.

The latter years (2020 and 2021) show moderate positive provisions, indicating a potential stabilization.

Cash Operating Taxes

Experienced sharp variations, with the highest cash tax paid in 2018 aligning with the peak in income tax provision.

Following the 2018 peak, the cash tax outlay declined and stabilized at a lower level by 2020 and 2021.

This may suggest shifts in operational profitability, timing issues in tax payments, or changes in tax liabilities over these years.

The financial data presented reveals notable trends in the company's capital structure and financing over the six-year period ending September 30, 2021.

Total Reported Debt & Leases

This item shows a significant increase from 2016 to 2018, rising from $11,801 million to a peak of $21,951 million in 2018. Subsequently, there is a consistent downward trend from 2018 through 2021, decreasing to $18,080 million. This decline may suggest efforts to reduce leverage or refinance obligations with lower levels of debt.

Shareholders’ Equity

Shareholders’ equity exhibits strong growth throughout the period. Starting at $7,633 million in 2016, it more than doubles by 2018 to $20,994 million, then continues increasing steadily to nearly $23,677 million by 2021. This upward trajectory indicates sustained profitability or capital infusions supporting the equity base.

Invested Capital

Invested capital reflects the combined financing through debt and equity and follows a similar pattern as debt, increasing from $22,258 million in 2016 to a peak of $47,282 million in 2018. Afterward, invested capital experiences a moderate decline, ending at $45,278 million in 2021. This suggests that while the total capital invested in the business grew substantially initially, it has somewhat plateaued or been optimized in recent years.

Overall, the data indicates an initial period of expansion or increased financing up to 2018, followed by a phase of debt reduction and stability in total invested capital. The continuous growth in shareholders’ equity through this period highlights strengthening financial resilience and potential value creation for shareholders.

The financial data over the six-year period reveals notable trends in economic profit, invested capital, and economic spread ratio for the company.

Economic Profit

Economic profit has consistently been negative throughout the period, indicating that the company has not generated returns above its cost of capital. The figure showed an overall deepening from -1,431 million USD in 2016 to its lowest point of -3,950 million USD in 2018. After 2018, the negative economic profit somewhat improved but remained substantially below zero, recording -2,327 million USD in 2021, which still signifies a significant value loss.

Invested Capital

The invested capital increased substantially from 22,258 million USD in 2016 to a peak of 47,282 million USD in 2018. Following this peak, the invested capital slightly decreased but remained relatively stable around the 45,000 million USD range through 2021. This increase in capital investment suggests expansion or substantial asset accumulation during the initial years, stabilizing afterward.

Economic Spread Ratio

The economic spread ratio was negative across all periods, which corresponds to the negative economic profits indicating that returns did not cover the cost of capital. The spread worsened from -6.43% in 2016 to -8.35% in 2018, aligning with the peak economic loss period. After 2018, the ratio showed improvement, moving to -5.14% in 2021, reflecting some recovery though it remained negative and indicative of financial underperformance relative to capital costs.

In summary, the data depicts a company that increased its capital base over time but struggled to generate sufficient returns on that capital, suffering economically during the mid-period before partial improvement in later years. Despite this partial recovery, the economic profit and spread remain negative, suggesting ongoing challenges in creating shareholder value.

Economic Profit

The economic profit exhibited a generally negative trend throughout the analyzed period. It reached its lowest point in 2018 at -3950 million USD, indicating a significant loss in that year. After this nadir, there was some recovery, with the loss decreasing to -2327 million USD by 2021. Despite improvements from 2018 onwards, economic profit remained negative each year, reflecting ongoing challenges in achieving positive economic returns.

Revenues

Revenues showed an overall increasing trend over the period under review. They began at 12,483 million USD in 2016, a slight dip in 2017 to 12,093 million USD, and then a substantial growth from 2017 through 2021. The revenue peaked at 20,248 million USD in 2021, which represents a considerable increase compared to the starting figure. This upward trend suggests successful expansion or improved sales performance during the latter years.

Economic Profit Margin

The economic profit margin followed a pattern similar to economic profit, remaining negative throughout the period. The margin deteriorated from -11.47% in 2016 to its lowest point of -24.71% in 2018, indicating decreasing profitability relative to revenue. Subsequently, there was an improvement, with the margin rising to -11.49% by 2021. This partial recovery, while still reflecting negative margins, points to enhanced efficiency or reduced economic costs relative to revenue after 2018.

Key Insights

Despite the positive trend in revenues, the continuous negative economic profit and margin reveal that costs or capital charges outweighed the returns generated. The peak negative economic profit in 2018 coincides with the lowest economic profit margin, highlighting that year as particularly challenging. The subsequent improvement in both measures suggests efforts to enhance profitability or reduce expenses have had a positive effect; however, achieving positive economic profit remains a goal for future periods.