Dell Technologies Inc. (NYSE:DELL)

The analysis of the financial data reveals notable trends and fluctuations in key performance indicators over the six-year period.

Net Operating Profit After Taxes (NOPAT)

The NOPAT shows a peak in the fiscal year ending January 29, 2021, reaching 7,942 million US dollars. After maintaining a high level in the following year at 7,874 million, there is a marked decline to 5,638 million in 2023, followed by a continued decrease to 2,835 million and then to 2,070 million by 2025. Overall, this indicates a significant downward trend in profitability after 2021.

Cost of Capital

The cost of capital increased from 7% in 2020 to a peak of 11.5% in 2025, with notable rises particularly between 2023 and 2025. This upward trend in the cost of capital suggests increasing financing costs or perceived risks associated with the company’s operations or market conditions.

Invested Capital

Invested capital remained relatively stable from 2020 to 2021, increasing slightly from 81,348 million to 83,528 million US dollars. However, there was a significant reduction to 53,988 million in 2022, then fluctuating modestly around that lower range, declining gradually to 49,926 million by 2025. This reduction could indicate divestments, asset sales, or efficiency improvements in the use of capital.

Economic Profit

Economic profit, which considers the cost of capital, shows considerable volatility. It improved from a negative value of -643 million in 2020 to a positive 2,704 million in 2022, indicating a temporarily strong creation of value. However, after 2022, economic profit declined sharply into negative territory, reaching -3,671 million in 2025. This negative trend highlights deteriorating value creation, influenced by both the decreasing NOPAT and rising cost of capital.

In summary, the company experienced robust profitability and positive economic value creation up to 2022, followed by a period of significant declines in operating profitability and economic profit. The escalating cost of capital exacerbated the downturn in economic profit despite reductions in invested capital, reflecting heightened financial challenges or risk perceptions in recent years.

Net income attributable to Dell Technologies Inc.

The net income exhibited a fluctuating trend over the periods analyzed. It started at 4,616 million USD in early 2020, then declined to 3,250 million USD by early 2021. This was followed by a significant increase to 5,563 million USD in early 2022. After this peak, net income dropped sharply to 2,442 million USD in early 2023, before gradually rising again to 3,211 million USD in early 2024 and reaching 4,592 million USD in early 2025. Overall, net income showed volatility with a recovery trend towards the end of the period.

Net operating profit after taxes (NOPAT)

NOPAT demonstrated considerable variability during the examined timeframe. Initially, it was at 5,052 million USD in early 2020, then increased substantially to 7,942 million USD in early 2021. It remained relatively stable in early 2022 at 7,874 million USD but experienced a notable decline to 5,638 million USD in early 2023. The downward trajectory continued sharply, with NOPAT decreasing to 2,835 million USD in early 2024 and further dropping to 2,070 million USD by early 2025. This pattern indicates a peak in operating profitability around 2021-2022, followed by a sustained downward trend.

Key Observations

Both net income and NOPAT values experienced significant fluctuations across the reviewed years. While net income showed a recovery phase in the last two years, NOPAT declined more consistently after reaching high levels in 2021 and 2022. The divergence in the trends between net income and NOPAT in the later years may suggest changes in operational efficiency, tax impacts, or other non-operating factors affecting net income. The sustained decrease in NOPAT highlights a potential weakening in core operational profitability that merits further investigation.

Income tax expense (benefit)

The income tax expense shows a significant fluctuation over the periods analyzed. In the fiscal year ending January 31, 2020, there was a notable tax benefit of -$5,533 million, indicating a tax credit or refund situation. Subsequently, the tax expense turned positive and increased from $165 million in 2021 to a peak of $981 million in 2022. After this peak, a gradual decline was observed, with expenses decreasing to $803 million in 2023, $692 million in 2024, and further down to $472 million in 2025. This trend suggests a recovery from the initial tax benefit, followed by a reduction in tax expenses in recent years, possibly reflecting changes in taxable income or tax planning strategies.

Cash operating taxes

Cash operating taxes exhibited variability throughout the periods. Starting at $1,348 million in 2020, the amount paid decreased to $1,071 million in 2021. This was followed by a substantial increase to $1,523 million in 2022 and further growth to $1,762 million in 2023. However, a sharp decrease is evident in the last two periods, with cash operating taxes falling to $1,042 million in 2024 and $947 million in 2025. These fluctuations indicate variability in cash tax payments, which could be attributed to changes in operating profits, tax rates, or timing differences in tax payments.

Total reported debt & leases

The total reported debt and leases exhibit a significant downward trend over the observed periods. Starting from a peak of $53,848 million in January 2020, the amount decreases to $50,207 million by January 2021. A pronounced reduction is evident in the following years, with debt declining to $27,961 million by January 2022. Although there is a slight increase to $30,478 million in February 2023, the downward trajectory resumes subsequently, reaching $25,325 million by January 2025. This pattern indicates a strategic effort to reduce overall debt burden.

Total Dell Technologies Inc. stockholders’ equity (deficit)

The stockholders’ equity fluctuates between positive and negative values across the periods. Initially, there is a deficit of -$1,574 million as of January 2020. This reverses to a positive equity position of $2,479 million by January 2021, suggesting improved net asset value or capital structure during that timeframe. However, the equity returns to negative territory subsequently and remains so through the latest period, with deficits ranging from -$1,685 million to -$3,122 million, before improving slightly to -$1,482 million by January 2025. The persistent negative equity in most years may indicate accumulated losses, significant liabilities, or other financial challenges impacting net worth.

Invested capital

Invested capital displays an overall declining trend throughout the data set. It peaks at $83,528 million in January 2021, followed by a sharp decrease to $53,988 million in January 2022. Subsequent periods show minor fluctuations but generally continue downward, reaching $49,926 million by January 2025. This reduction in invested capital suggests a contraction in the company’s total invested resources, which may be related to decreased asset base or strategic divestitures aligned with debt reduction efforts.

The financial data reveals notable fluctuations in the economic profit, invested capital, and economic spread ratio over the six-year period under review.

Economic Profit

The economic profit displayed significant variability. Beginning with a negative value in 2020 (-643 million US$), it rose sharply to a positive 347 million US$ in 2021 and further increased substantially to 2,704 million US$ in 2022. However, from 2023 onward, there was a pronounced decline, with economic profit slipping into negative territory, registering -3180 million US$ in 2024 and decreasing further to -3671 million US$ in 2025. This suggests a period of improved profitability followed by a deteriorating economic performance in the latter years.

Invested Capital

The level of invested capital exhibited a general downward trend after peaking in 2021. It increased mildly from 81,348 million US$ in 2020 to 83,528 million US$ in 2021 but then decreased sharply to 53,988 million US$ in 2022. Following that, it showed slight fluctuations, declining to 57,982 million US$ in 2023, then dropping again to 53,565 million US$ in 2024 and further to 49,926 million US$ in 2025. This overall reduction in invested capital could indicate divestment or optimization of capital employed over the period.

Economic Spread Ratio

The economic spread ratio followed a trend consistent with economic profit. Initially negative at -0.79% in 2020, it improved to a positive 0.42% in 2021 and peaked significantly at 5.01% in 2022, reflecting effective returns above the cost of capital during this time. However, the ratio declined sharply thereafter, to 0.88% in 2023 and then into negative territory at -5.94% in 2024 and -7.35% in 2025, indicating returns fell below the cost of capital, aligning with the negative economic profit observed.

Overall, the data points to a strong performance in the middle of the period, characterized by improved profitability and returns exceeding the cost of capital. However, the subsequent years show a marked decline in both economic profit and economic spread ratio, coupled with a consistent reduction in invested capital, suggesting challenges in generating value above capital costs and a possible strategic shift in asset allocation or operational efficiency.

The financial data reveals notable fluctuations in the economic profit and economic profit margin over the analyzed periods, alongside variations in adjusted net revenue.

Economic Profit

The economic profit exhibited considerable volatility. Initially, it was negative at -643 million US dollars in early 2020, followed by a positive turnaround reaching a peak of 2,704 million US dollars in early 2022. Subsequently, the figure declined sharply, turning negative again in the last two reported periods, ending at -3,671 million US dollars in early 2025. This pattern indicates a period of improved profitability followed by substantial economic losses.

Adjusted Net Revenue

Adjusted net revenue showed a generally increasing trend from 95,944 million US dollars in early 2020 to a peak of 105,014 million US dollars in early 2023. However, a significant decline occurred in early 2024 to 87,284 million US dollars, with a moderate recovery to 92,387 million US dollars by early 2025. This trajectory suggests underlying challenges in revenue generation during the latter periods.

Economic Profit Margin

The economic profit margin mirrored the economic profit's volatility, starting with a negative margin of -0.67% in 2020, rising to a positive peak of 2.62% in 2022, before falling to -3.97% in early 2025. This shift underscores the difficulty in translating revenue into economic profit in recent years, highlighting pressure on profitability relative to revenue.

Overall, the data points to a transient phase of improved economic performance around 2021-2022, followed by a downturn marked by decreasing adjusted net revenue and worsening economic profit margins. These trends may warrant further investigation into operational efficiency, cost management, and market conditions influencing profitability.