Dell Technologies Inc. (NYSE:DELL)

The analysis of the financial trends reveals significant fluctuations in key performance indicators over the six-year period under review.

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibited an overall declining trend. Starting at $5,052 million, it increased considerably to a peak of $7,942 million by the 2021 fiscal year. However, from that peak, there was a steady decrease, dropping to $2,070 million in 2025. This movement indicates a reduction in the profitability from operational activities after adjusting for taxes in recent years.

Cost of Capital

The cost of capital showed an increasing trend, rising from 7.01% in 2020 to 11.52% in 2025. This steady increase suggests a higher required return on invested capital, reflecting either market conditions, increased risk perceptions, or changes in the company’s capital structure over time.

Invested Capital

Invested capital declined sharply after 2021, falling from $83,528 million down to $49,926 million by 2025. This downward trajectory suggests a contraction in the company’s asset base or a divestment of capital investments, possibly signaling strategic shifts or restructuring activities.

Economic Profit

Economic profit demonstrated substantial volatility. It shifted from a negative value of -$652 million in 2020 to positive figures with a peak at $2,693 million in 2022. After 2022, economic profit deteriorated rapidly, becoming significantly negative at -$3,684 million by 2025. This pattern indicates that while the company was generating value above its cost of capital mid-term, it faced considerable value destruction in the latter years.

In summary, while profitability reached its height early in the period, subsequent years saw declines both in profitability and invested capital, accompanied by rising capital costs. This combination resulted in weakened economic profit performance, pointing to increased financial challenges and a potential need for strategic reassessment.

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 over the examined periods reveals significant fluctuations in the economic profit, invested capital, and economic spread ratio. These variations suggest shifts in operational efficiency, capital management, and the overall profitability of the company.

Economic Profit

Economic profit displayed a volatile trend, starting with a negative value in early 2020, turning positive in 2021 and reaching a peak in 2022. This was followed by a decline back into negative territory in the 2024 and 2025 periods. The peak in 2022 indicates a period of strong value creation, whereas the subsequent negative profits suggest either increased costs, diminished returns, or other challenges affecting profitability.

Invested Capital

Invested capital showed a declining trend from 2021 onwards, dropping from approximately 83.5 billion US dollars in early 2021 to around 49.9 billion US dollars by early 2025. The pronounced decrease after 2021 may reflect asset divestment, depreciation, or strategic reduction in capital allocation.

Economic Spread Ratio

The economic spread ratio followed a similar pattern to economic profit but revealed sharper contrasts. It was negative in early 2020, turned positive in 2021 and peaked significantly in 2022, indicating improved returns on invested capital. However, the ratio deteriorated considerably in 2024 and 2025, with deeply negative spreads, implying returns fell below the cost of capital and underscoring operational and financial inefficiencies in the most recent years.

Overall, the data points to a company that experienced a notable recovery and strong performance around 2021 and 2022 but faced substantial challenges in the subsequent years. The decline in both invested capital and economic returns in the latter periods may warrant further investigation into cost management, asset utilization, and external market factors impacting financial performance.

The financial data reflects significant variability in the company's economic profit and associated margins over the reported periods. While the adjusted net revenue exhibits a general upward trajectory until the earlier part of the series, followed by a decline in the later years, the economic profit displays considerable fluctuations, indicating periods of both profitability and loss.

Economic Profit

The economic profit turned positive after the initial period, reaching a peak in the third year, signifying enhanced operational performance and value creation during that time. However, in subsequent years, the economic profit reversed sharply into negative territory, with increasing losses in the latest periods. This decline points to rising costs, diminishing returns, or other adverse financial impacts that outweighed revenue gains.

Adjusted Net Revenue

Adjusted net revenue showed gradual growth from the first year through the fourth year, indicating an expansion in sales or service income. Nevertheless, there is a noticeable drop in the fifth year, with a modest recovery in the final year under review. This pattern suggests fluctuating demand or changes in market conditions affecting the company's revenue generation capabilities.

Economic Profit Margin

The economic profit margin aligns with the trends observed in economic profit, initially moving from negative to positive margins before declining steeply into negative rates in the final observed periods. The highest margin recorded corresponds with the peak in economic profit, highlighting a period when the company was maximizing economic value relative to revenue. The subsequent margin downturn reveals increased inefficiencies or cost pressures relative to sales.

Overall, the data suggests a period of recovery and improvement in financial performance mid-series, followed by a regression in both profitability and economic efficiency in the later periods. The simultaneous decrease in economic profit and margin despite relatively stable or only slightly reduced revenues indicates underlying challenges in cost management or other operational factors impacting profitability. Continued monitoring and strategic adjustments may be necessary to address these negative profitability trends.