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.
Economic Profit
Corning Inc., economic profit calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 817 – 14.84% × 20,411 = -2,212
An analysis of the financial performance from 2019 to 2023 reveals a consistent inability to generate positive economic profit, indicating that the returns on invested capital have remained below the required cost of capital throughout the period. While there was a period of recovery between 2019 and 2021, a significant deterioration in value creation is observed in the most recent two fiscal years.
- Net Operating Profit After Taxes (NOPAT)
- A volatile trend is observed in NOPAT, which grew from 968 million USD in 2019 to a peak of 2,088 million USD in 2021. However, this growth was not sustained, as profits declined sharply to 817 million USD by 2023, representing a level lower than that recorded at the start of the five-year period.
- Cost of Capital
- The cost of capital exhibited a steady upward trajectory for most of the period, rising from 13.17% in 2019 to a peak of 15.41% in 2022. A slight reduction to 14.84% occurred in 2023, but the overall increase in the hurdle rate has placed greater pressure on the company to generate higher operating returns to achieve economic viability.
- Invested Capital
- Invested capital remained relatively stable, fluctuating within a range of approximately 18.9 billion USD to 21.2 billion USD. A peak was noted in 2020, followed by a slight contraction and a subsequent increase to 20,411 million USD in 2023. The relative stability of the capital base suggests that the fluctuations in economic profit are driven primarily by operating performance and capital costs rather than significant changes in the asset base.
- Economic Profit
- Economic profit remained negative for all five years, signifying persistent value destruction. The deficit narrowed from -1,517 million USD in 2019 to its least negative point of -906 million USD in 2021, coinciding with the peak in NOPAT. However, a sharp reversal occurred thereafter, with the economic loss expanding to -2,212 million USD in 2023. This decline is attributed to the simultaneous contraction of NOPAT and the elevated cost of capital relative to the invested capital base.
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Net Operating Profit after Taxes (NOPAT)
Corning Inc., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2019-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in doubtful accounts.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in equity equivalents to net income attributable to Corning Incorporated.
5 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 958 × 4.40% = 42
6 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 371 × 21.00% = 78
7 Addition of after taxes interest expense to net income attributable to Corning Incorporated.
8 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 38 × 21.00% = 8
9 Elimination of after taxes investment income.
- Net income attributable to Corning Incorporated
- The net income shows a fluctuating trend over the five-year period. It decreased notably from 960 million US dollars in 2019 to 512 million in 2020, indicating a significant reduction in profitability during that year. The following year, 2021, saw a strong recovery with net income rising sharply to 1,906 million US dollars, the highest value in the analyzed time frame. However, in 2022, net income declined again to 1,316 million US dollars, and this downward trend continued into 2023, reaching 581 million US dollars, which is the second lowest value in the data. Overall, there is considerable volatility, with a peak in 2021 and declines before and after that year.
- Net operating profit after taxes (NOPAT)
- The NOPAT figures exhibit a different pattern compared to net income. Starting at 968 million US dollars in 2019, there is a marked increase to 1,761 million in 2020, indicating improved operating efficiency or reduced tax expenses during that year. The upward movement continues into 2021, reaching 2,088 million US dollars, the highest point in the sequence, which aligns with the peak net income year. However, this positive trajectory reverses from 2021 onward, with NOPAT decreasing to 1,544 million in 2022 and further down to 817 million in 2023. While the decline is notable, NOPAT remains substantially higher in 2023 compared to 2019, reflecting an overall improvement in operating profitability despite recent reductions.
- Comparative insights
- Comparing net income and NOPAT reveals potential discrepancies, possibly due to non-operating factors or tax-related items affecting net income more significantly. In 2020, net income fell sharply, whereas NOPAT increased substantially, suggesting that operational performance improved despite a lower bottom-line profit. The peak in both metrics in 2021 signals a strong year for both operating and net profitability. Subsequent declines in 2022 and 2023 indicate challenges impacting both operating profits and net income, though NOPAT's decline is less severe than that of net income, suggesting that non-operating expenses or taxes could have adversely affected net income in the later years.
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Cash Operating Taxes
Corning Inc., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2019-12-31).
- Provision for Income Taxes
- The provision for income taxes exhibited a fluctuating trend over the analyzed period. It decreased significantly from 256 million US dollars in 2019 to 111 million US dollars in 2020. Subsequently, there was a substantial increase reaching 491 million US dollars in 2021. After this peak, the provision decreased to 411 million US dollars in 2022 and further declined to 168 million US dollars in 2023. Overall, the provision showed volatility with considerable variations year over year, indicating changes in taxable income or adjustments in tax liabilities.
- Cash Operating Taxes
- Cash operating taxes followed a somewhat parallel but less volatile pattern compared to the provision for income taxes. Starting at 494 million US dollars in 2019, the amount dropped to its lowest value of 192 million in 2020. It then rose sharply to 542 million in 2021, slightly decreased to 523 million in 2022, and further declined to 313 million in 2023. This trend suggests some level of recovery in tax payments after the initial decline but a decreasing trend in the latter two years, which may reflect variations in operational profitability or cash flow management related to tax obligations.
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Invested Capital
Corning Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2019-12-31).
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 revenue.
5 Addition of equity equivalents to total Corning Incorporated shareholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
The financial data reveals distinct trends in debt, equity, and invested capital over the five-year period.
- Total reported debt & leases
- The total debt and leases increased from approximately $8.25 billion in 2019 to $8.70 billion in 2020, indicating a rise in financial obligations during that year. Subsequently, it decreased to $7.83 billion in 2021 and remained relatively stable in 2022 at $7.82 billion. In 2023, the figure rose again to about $8.48 billion. This pattern suggests some fluctuations in leverage, with a general tendency to manage debt levels downward after 2020, followed by a renewed increase in 2023.
- Total shareholders’ equity
- Shareholders’ equity demonstrated a declining trend over the period. Starting at approximately $12.9 billion in 2019, equity rose slightly to $13.3 billion in 2020 but decreased thereafter, reaching $12.3 billion in 2021, $12.0 billion in 2022, and further declining to $11.6 billion in 2023. This consistent decrease from 2020 onwards indicates potential challenges in generating retained earnings or possible distributions impacting equity.
- Invested capital
- Invested capital showed an overall upward trend despite some year-to-year fluctuations. It increased from roughly $18.9 billion in 2019 to a peak of $21.2 billion in 2020. After declining to around $19.7 billion in 2021 and remaining stable in 2022, it increased again to $20.4 billion in 2023. This suggests continued investment activity with some variability, reflecting both changes in debt and equity components.
In summary, the company experienced fluctuating leverage with debt levels rising and falling over the five years. Equity showed a downward trend after 2020, which may warrant further analysis regarding profitability or capital management. Invested capital reflected active capital deployment with an overall growth trend despite intermediate declines. The interactions among these metrics suggest ongoing adjustments in the company's capital structure over the period.
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Cost of Capital
Corning Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 27,465) | 27,465) | ÷ | 35,743) | = | 0.77 | 0.77 | × | 18.29% | = | 14.05% | ||
| Convertible preferred stock, Series A, par value $100 per share (book value) | —) | —) | ÷ | 35,743) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Long-term debt and short-term borrowings3 | 7,320) | 7,320) | ÷ | 35,743) | = | 0.20 | 0.20 | × | 4.30% × (1 – 21.00%) | = | 0.70% | ||
| Operating lease liability4 | 958) | 958) | ÷ | 35,743) | = | 0.03 | 0.03 | × | 4.40% × (1 – 21.00%) | = | 0.09% | ||
| Total: | 35,743) | 1.00 | 14.84% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and short-term borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 30,197) | 30,197) | ÷ | 37,427) | = | 0.81 | 0.81 | × | 18.29% | = | 14.76% | ||
| Convertible preferred stock, Series A, par value $100 per share (book value) | —) | —) | ÷ | 37,427) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Long-term debt and short-term borrowings3 | 6,324) | 6,324) | ÷ | 37,427) | = | 0.17 | 0.17 | × | 4.26% × (1 – 21.00%) | = | 0.57% | ||
| Operating lease liability4 | 906) | 906) | ÷ | 37,427) | = | 0.02 | 0.02 | × | 4.20% × (1 – 21.00%) | = | 0.08% | ||
| Total: | 37,427) | 1.00 | 15.41% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and short-term borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 34,925) | 34,925) | ÷ | 44,065) | = | 0.79 | 0.79 | × | 18.29% | = | 14.50% | ||
| Convertible preferred stock, Series A, par value $100 per share (book value) | —) | —) | ÷ | 44,065) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Long-term debt and short-term borrowings3 | 8,355) | 8,355) | ÷ | 44,065) | = | 0.19 | 0.19 | × | 4.21% × (1 – 21.00%) | = | 0.63% | ||
| Operating lease liability4 | 785) | 785) | ÷ | 44,065) | = | 0.02 | 0.02 | × | 4.00% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 44,065) | 1.00 | 15.18% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and short-term borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 28,337) | 28,337) | ÷ | 40,922) | = | 0.69 | 0.69 | × | 18.29% | = | 12.67% | ||
| Convertible preferred stock, Series A, par value $100 per share (book value) | 2,300) | 2,300) | ÷ | 40,922) | = | 0.06 | 0.06 | × | 4.25% | = | 0.24% | ||
| Long-term debt and short-term borrowings3 | 9,556) | 9,556) | ÷ | 40,922) | = | 0.23 | 0.23 | × | 4.12% × (1 – 21.00%) | = | 0.76% | ||
| Operating lease liability4 | 729) | 729) | ÷ | 40,922) | = | 0.02 | 0.02 | × | 3.90% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 40,922) | 1.00 | 13.72% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and short-term borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 21,359) | 21,359) | ÷ | 32,682) | = | 0.65 | 0.65 | × | 18.29% | = | 11.95% | ||
| Convertible preferred stock, Series A, par value $100 per share (book value) | 2,300) | 2,300) | ÷ | 32,682) | = | 0.07 | 0.07 | × | 4.25% | = | 0.30% | ||
| Long-term debt and short-term borrowings3 | 8,511) | 8,511) | ÷ | 32,682) | = | 0.26 | 0.26 | × | 4.20% × (1 – 21.00%) | = | 0.86% | ||
| Operating lease liability4 | 512) | 512) | ÷ | 32,682) | = | 0.02 | 0.02 | × | 4.10% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 32,682) | 1.00 | 13.17% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and short-term borrowings. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Corning Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (2,212) | (1,486) | (906) | (1,152) | (1,517) | |
| Invested capital2 | 20,411) | 19,666) | 19,716) | 21,233) | 18,872) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -10.84% | -7.56% | -4.59% | -5.43% | -8.04% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Apple Inc. | 137.62% | 199.14% | 195.50% | 143.47% | — | |
| Arista Networks Inc. | 20.62% | 16.15% | 31.20% | — | — | |
| Cisco Systems Inc. | 6.45% | 6.37% | 5.62% | 9.92% | — | |
| Dell Technologies Inc. | -0.65% | 3.23% | -1.30% | — | — | |
| Lumentum Holdings Inc. | -17.16% | -5.23% | 7.20% | -4.29% | — | |
| Super Micro Computer Inc. | 4.24% | -4.67% | -12.64% | -15.58% | — | |
Based on: 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), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -2,212 ÷ 20,411 = -10.84%
4 Click competitor name to see calculations.
The analysis of economic value added (EVA) metrics from 2019 to 2023 reveals a persistent inability to generate positive economic profit, indicating that returns on invested capital have consistently remained below the company's cost of capital. While a period of modest recovery was observed between 2020 and 2021, the subsequent two years demonstrate a significant deterioration in value creation capacity.
- Economic Profit Trends
- Economic profit remained negative throughout the five-year period. A narrowing of losses occurred between 2019 and 2021, with the deficit improving from -1,517 million US$ to -906 million US$. This trend reversed sharply in 2022 and 2023, with economic profit falling to -2,212 million US$ by December 31, 2023, marking the lowest point in the observed timeframe.
- Invested Capital Dynamics
- Invested capital remained relatively stable, fluctuating within a range of approximately 18.9 billion US$ to 21.2 billion US$. A peak was recorded in 2020 at 21,233 million US$, followed by a period of slight contraction in 2021 and 2022, and a subsequent increase to 20,411 million US$ in 2023.
- Economic Spread Ratio Performance
- The economic spread ratio consistently operated in negative territory, reflecting a consistent failure to cover the cost of capital. The ratio improved from -8.04% in 2019 to a high of -4.59% in 2021. However, a steep decline followed, with the ratio dropping to -7.56% in 2022 and reaching -10.84% in 2023. This widening negative spread indicates a growing divergence between the capital employed and the returns generated by the entity.
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Economic Profit Margin
Corning Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (2,212) | (1,486) | (906) | (1,152) | (1,517) | |
| Net sales | 12,588) | 14,189) | 14,082) | 11,303) | 11,503) | |
| Add: Increase (decrease) in deferred revenue | (9) | (43) | (112) | 1,024) | —) | |
| Adjusted net sales | 12,579) | 14,146) | 13,970) | 12,327) | 11,503) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -17.59% | -10.50% | -6.48% | -9.35% | -13.19% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Apple Inc. | 21.65% | 23.53% | 22.71% | 18.80% | — | |
| Arista Networks Inc. | 15.57% | 11.13% | 18.27% | — | — | |
| Cisco Systems Inc. | 6.42% | 7.15% | 6.26% | 10.35% | — | |
| Dell Technologies Inc. | -0.36% | 1.69% | -1.11% | — | — | |
| Lumentum Holdings Inc. | -28.16% | -7.64% | 8.12% | -4.09% | — | |
| Super Micro Computer Inc. | 1.43% | -1.99% | -4.56% | -5.78% | — | |
Based on: 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), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × -2,212 ÷ 12,579 = -17.59%
3 Click competitor name to see calculations.
The financial performance from 2019 to 2023 is characterized by a consistent inability to generate positive economic value, as evidenced by negative economic profit and economic profit margins throughout the entire period.
- Economic Profit Trends
- Economic profit remained negative over the five-year trajectory. A period of relative improvement was observed between 2019 and 2021, with losses narrowing from -1,517 million to -906 million. However, this trend reversed sharply starting in 2022, with the deficit widening to -1,486 million and reaching a five-year low of -2,212 million by the end of 2023.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the trajectory of absolute economic profit, exhibiting a volatile pattern. The margin improved from -13.19% in 2019 to its most favorable level of -6.48% in 2021. This improvement was subsequently erased, with the margin deteriorating to -10.50% in 2022 and further declining to -17.59% in 2023, indicating a significant erosion of value creation relative to revenue.
- Correlation with Adjusted Net Sales
- Adjusted net sales showed a growth trend from 2019 through 2022, increasing from 11,503 million to 14,146 million. Despite this expansion in top-line revenue, economic profit did not transition into positive territory. In 2023, a simultaneous decline in adjusted net sales to 12,579 million coincided with the steepest drop in economic profit margin, suggesting that the decrease in scale combined with increasing costs or capital charges exacerbated the loss of economic value.
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