Home Depot Inc. (NYSE:HD)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes demonstrated a general upward trend from 12,860 million US dollars in 2020 to a peak of 18,170 million US dollars in 2023. However, in the subsequent periods, there was a decline to 16,384 million in 2024, followed by a slight recovery to 16,730 million by 2025. This indicates strong growth initially, with some volatility and a modest reduction in profitability in the most recent years.

Cost of Capital

The cost of capital showed minor fluctuations within a relatively narrow range, starting at 12.9% in 2020, peaking at 13.6% in 2024, and settling at approximately 13.32% in 2025. This suggests stable yet slightly increasing capital costs over the period, which may pressure profit margins and investment returns.

Invested Capital

Invested capital rose significantly from 36,678 million US dollars in 2020 to 72,841 million in 2025. Notably, sharp increases occurred between 2020 and 2021 and again from 2024 to 2025. This considerable growth in invested capital suggests substantial expansion or asset acquisition, possibly to support higher operational capacity or strategic investments.

Economic Profit

Economic profit exhibited variability, starting at 8,130 million in 2020, decreasing slightly in 2021 to 7,503 million, and then increasing sharply to 11,681 million in 2022. After a decline to 7,029 million by 2025, the trend indicates that although profitability in excess of capital costs was strong through 2022, it has been on a downward trajectory thereafter. The decreasing economic profit despite rising invested capital may suggest diminishing returns on incremental investments or increased cost pressures.

Summary

Overall, the data reveals strong initial growth in net operating profit and economic profit through 2022, correlating with substantial increases in invested capital. However, profit trends have softened in more recent years alongside rising cost of capital, which could reflect challenges in maintaining efficient returns on a growing capital base. The declining economic profit despite increased invested capital calls for scrutiny of asset utilization and cost management to sustain value creation.

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.

Economic profit

The economic profit shows notable fluctuation over the observed years. After an initial value of 8,130 million USD in early 2020, there was a decrease to 7,503 million USD in early 2021, followed by a sharp increase to 11,681 million USD in early 2022. Subsequently, it declined again to 10,859 million USD in early 2023, continuing its downward trend to 8,785 million USD in early 2024, and further to 7,029 million USD in early 2025. This pattern suggests volatile profitability with a peak reached in 2022 but an overall declining trend in the more recent years.

Invested capital

The invested capital demonstrates a consistent upward trend during the period. Starting at 36,678 million USD in early 2020, it rose significantly to 49,973 million USD in early 2021. A slight decline followed in early 2022 to 48,299 million USD, but from that point onward, invested capital increased steadily, reaching 55,111 million USD in 2023, 55,884 million USD in 2024, and culminating at 72,841 million USD by early 2025. This indicates ongoing reinvestment and expansion of the company’s capital base over time.

Economic spread ratio

The economic spread ratio reflects the efficiency in generating economic profit from invested capital and exhibits a declining trend overall. It started at a high level of 22.17% in early 2020, dropped notably to 15.01% in early 2021, then rebounded to 24.19% in early 2022. Following this peak, it gradually decreased again to 19.7% in 2023, 15.72% in 2024, and continued its decline to 9.65% in early 2025. The trend shows diminishing relative profitability despite increases in invested capital, possibly indicating increased capital intensity or decreasing return on investments over the period.

Overall Insights

There is a clear contrast between the rising invested capital and the fluctuating but generally decreasing economic profit and economic spread ratio. This combination signals that while significant capital investments have been made, their efficiency in generating excess returns has weakened over time, especially in the most recent years. The peak economic profit and spread in 2022 suggest a temporary performance high that was not sustained. The data may reflect challenges in maintaining profitability amid growing capital commitments, warranting further investigation into operational effectiveness and capital allocation strategies.

Economic Profit

The economic profit demonstrated some fluctuation over the periods analyzed. Beginning at $8,130 million in early 2020, it declined to $7,503 million in early 2021. Subsequently, it increased substantially, reaching a peak of $11,681 million in early 2022, before experiencing a gradual decline over the following years, falling to $7,029 million by early 2025. This pattern suggests a period of strong economic profit growth followed by a consistent decrease.

Adjusted Net Sales

Adjusted net sales exhibited a generally upward trend throughout the observed timeframe. Starting at approximately $110,559 million in early 2020, sales increased steadily year over year, with some minor fluctuations. By early 2025, sales had reached approximately $159,362 million, indicating sustained growth in revenue despite some variability in economic profit.

Economic Profit Margin

The economic profit margin showed a declining trend overall. It started at 7.35% in early 2020, decreased to 5.65% in early 2021, then rebounded somewhat to 7.69% in early 2022. Following that, the margin experienced a steady decline, falling to 4.41% by early 2025. This suggests that despite growing net sales, profitability relative to sales has decreased over time, particularly after the peak in early 2022.

Summary of Trends

The data reveals a complex relationship between sales growth and profitability. Adjusted net sales have exhibited consistent growth, demonstrating expanding revenue streams. However, economic profit and the associated profit margins have been more volatile, peaking in early 2022 before undergoing a steady decline through early 2025. This divergence indicates pressures on profit efficiency or increased costs impacting economic profit margins despite stronger sales performance.