Home Depot Inc. (NYSE:HD)

Net Operating Profit After Taxes (NOPAT)

The NOPAT demonstrated an overall increasing trend from 2020 through 2022, rising from $12,860 million to $18,148 million. This positive momentum plateaued between 2022 and 2023, with values nearly stable around $18,170 million. Subsequently, a decline was observed in 2024, falling to $16,384 million, followed by a slight recovery in 2025, with NOPAT increasing modestly to $16,730 million.

Cost of Capital

The cost of capital exhibited minor fluctuations throughout the period but remained relatively stable within a narrow band. Starting at 13.09% in 2020, it peaked at 13.8% in 2024 before decreasing slightly to 13.52% in 2025. These changes indicate small variations in the company’s funding costs or risk perceptions.

Invested Capital

Invested capital showed a consistent upward trajectory over the years. Beginning at $36,678 million in 2020, it increased significantly to $49,973 million in 2021. After a slight dip to $48,299 million in 2022, it continued to grow steadily, reaching $55,884 million in 2024 and surging to $72,841 million in 2025. This pattern suggests increased asset deployment or expansion activities.

Economic Profit

Economic profit displayed a more volatile pattern. It started at $8,060 million in 2020, then declined to $7,402 million in 2021, followed by a sharp increase to $11,583 million in 2022. The figure declined again to $10,748 million in 2023 and continued downward to $6,882 million by 2025. Despite the fluctuations, the overall trend is downward from the peak in 2022, which could indicate challenges in generating returns above the cost of capital amid increasing invested capital.

Net Earnings

Net earnings exhibit an overall upward trend from the initial value of 11,242 million US dollars in the period ending February 2, 2020, reaching a peak of 17,105 million US dollars by January 29, 2023. However, after this peak, there is a noticeable decline, with net earnings decreasing to 15,143 million US dollars in January 28, 2024, and further slightly declining to 14,806 million US dollars by February 2, 2025.

Net Operating Profit After Taxes (NOPAT)

NOPAT shows an increasing pattern from 12,860 million US dollars in the period ending February 2, 2020, to reach 18,170 million US dollars as of January 29, 2023. Following this peak, there is a decline in the subsequent period to 16,384 million US dollars in January 28, 2024. However, unlike net earnings, NOPAT recovers slightly in the most recent period, increasing to 16,730 million US dollars by February 2, 2025.

Comparative Insights

Both net earnings and NOPAT follow a similar trend characterized by growth up to the period ending early 2023, followed by a reduction. The decline in net earnings is more consistent in the last two periods, whereas NOPAT experiences a partial recovery in the final period. This divergence could indicate changes in operational efficiency or tax impacts that warrant further examination. Overall, the data suggests a phase of growth culminating around 2023, with some signs of financial pressure or transitional changes in profitability thereafter.

The financial data reveals the trends in provision for income taxes and cash operating taxes over six consecutive years.

Provision for Income Taxes

From February 2020 to January 2021, the provision for income taxes increased significantly from 3,473 million US dollars to 4,112 million, representing a notable rise. This upward trend continued into January 2022, peaking at 5,304 million US dollars. However, in the following years, the provision began to decline slightly: decreasing to 5,372 million in January 2023, then further reducing to 4,781 million in January 2024, and ending at 4,600 million in February 2025. Overall, after an initial sharp rise through 2022, the provision for income taxes demonstrated a downward adjustment over the last three years in the dataset.

Cash Operating Taxes

Cash operating taxes showed a strong upward movement from 3,573 million US dollars in February 2020 to 5,040 million in January 2021. This increase continued into January 2022 with another rise to 5,876 million. The following year, January 2023, registered a slight decrease to 5,622 million, which continued with marginal declines in subsequent years: 5,482 million in January 2024 and 5,201 million in February 2025. This pattern indicates that after reaching a peak in early 2022, cash operating taxes began to taper moderately but remained considerably higher than the initial 2020 values.

In summary, both provision for income taxes and cash operating taxes experienced significant growth from 2020 through early 2022, indicating increased tax-related expenses or obligations during this period. Post-2022, both metrics showed a gradual decline, potentially reflecting changes in taxable income, tax strategies, or regulatory impacts. The consistent higher levels from 2021 onwards compared to 2020 suggest an overall increase in tax burden or profitability subject to tax over the six-year span.

The financial data reveals several notable trends in the company’s capital structure and financial position over the observed periods.

Total reported debt & leases

This figure exhibits a consistent upward trend throughout the periods, increasing from $37,377 million in early 2020 to $62,290 million by early 2025. The rise indicates a growing reliance on debt and lease obligations, which increased by nearly 67% over the five-year span.

Stockholders’ equity (deficit)

Stockholders’ equity fluctuates significantly, starting with a negative position of -$3,116 million in early 2020 and improving to a positive $3,299 million by early 2021. However, it swings back to a negative figure in early 2022 at -$1,696 million, before gradually increasing again to reach $6,640 million by early 2025. This volatility suggests periods of financial strain or restructuring, followed by recovery phases, ultimately resulting in a strengthened equity base.

Invested capital

Invested capital shows an overall increasing pattern, beginning at $36,678 million in 2020, rising to $49,973 million in 2021, and experiencing some fluctuations before reaching a peak of $72,841 million in 2025. This growth reflects increased capital deployment, possibly through investments, acquisitions, or asset expansion aligning with the rise in debt levels.

In summary, the company appears to have expanded its capital base and debt load significantly over the period, while stockholders’ equity demonstrated volatility but ultimately improved. The overall increase in invested capital alongside growing debt indicates a strategy of leveraging to finance growth or operations, which has enhanced the total resources employed in the business.

The financial metrics indicate fluctuating performance trends over the reviewed periods. Economic profit shows variability, initially decreasing from 8060 million US dollars in early 2020 to 7402 million US dollars in early 2021, followed by a significant increase peaking at 11583 million US dollars in early 2022. Subsequently, economic profit declines consistently over the next three periods, reaching 6882 million US dollars by early 2025.

Invested capital demonstrates an overall upward trend, with values rising from 36678 million US dollars in early 2020 to 72841 million US dollars in early 2025. There is a notable increase between 2020 and 2021, as well as again between 2023 and 2025, while the intermediate periods display more moderate fluctuations.

The economic spread ratio, expressed in percentage terms, follows a pattern somewhat aligned with economic profit but shows more pronounced volatility. It declines sharply from 21.97% in early 2020 to 14.81% in early 2021, recovers to a high of 23.98% by early 2022, and then decreases steadily through the subsequent years, ending at 9.45% in early 2025.

Economic Profit

Peaked in 2022 after a decline in 2021, followed by a gradual downturn through 2025.

Invested Capital

Exhibited a rising trend overall, more than doubling over the five-year span, indicating increased asset base or investment.

Economic Spread Ratio

Highly volatile, with an initial drop, a strong recovery in 2022, then continuous decreases, suggesting reduced efficiency in generating returns above the cost of capital.

The combined analysis reflects an expanding capital base alongside diminishing returns on investment efficiency in recent years, as evidenced by the declining economic spread ratio and economic profit despite higher invested capital. This may indicate challenges in maintaining profitability gains relative to the investments made during the latest periods.

Adjusted net sales

The adjusted net sales display a consistent upward trend over the observed periods. Starting at approximately 110.6 billion USD in early 2020, these sales increased steadily each year, reaching 159.4 billion USD by early 2025. This growth indicates an overall expansion in revenue generation capacity for the company.

Economic profit

The economic profit exhibits more volatility in comparison to net sales. After an initial decline from 8.06 billion USD in early 2020 to 7.4 billion USD in early 2021, the profit surged significantly to 11.58 billion USD in early 2022. However, thereafter, it followed a downward trajectory year-over-year, falling to 6.88 billion USD by early 2025. This pattern suggests fluctuations in profitability despite growing sales.

Economic profit margin

The economic profit margin percentage has generally declined during the period, falling from 7.29% in early 2020 to 4.32% in early 2025. This is indicative of decreasing efficiency in converting sales into economic profit. The margin peaked at 7.62% in early 2022, corresponding with the peak in economic profit, but has steadily reduced since then.