Home Depot Inc. (NYSE:HD)

Net operating profit after taxes (NOPAT)

The NOPAT exhibited an overall upward trend from 12,860 million US dollars in 2020 to a peak of 18,170 million US dollars in 2023. However, there was a slight decline in 2024 to 16,384 million US dollars, followed by a modest recovery to 16,730 million US dollars in 2025.

Cost of capital

The cost of capital remained relatively stable over the observed period, fluctuating marginally between 12.89% and 13.59%. The highest recorded value was 13.59% in 2024, while the lowest was 12.89% in 2020, indicating a consistent capital cost environment with only minor variations year to year.

Invested capital

Invested capital increased significantly from 36,678 million US dollars in 2020 to 72,841 million US dollars in 2025. This represents nearly a doubling of invested capital over the six-year period, with some fluctuations such as a slight decrease from 49,973 million US dollars in 2021 to 48,299 million US dollars in 2022, before continuing its upward trajectory.

Economic profit

Economic profit showed growth from 8,132 million US dollars in 2020 to a peak of 11,684 million US dollars in 2022. After 2022, economic profit declined steadily to 7,032 million US dollars in 2025, reflecting a reduction in value creation despite the increase in invested capital.

Summary of trends and insights

The company demonstrated a significant increase in invested capital over the period, almost doubling from 2020 to 2025. NOPAT mirrored generally positive growth until 2023, after which a decrease was noted. Despite stable cost of capital levels, the declining economic profit after 2022 suggests diminishing returns on the increased capital employed. The decoupling of economic profit from invested capital growth implies challenges in generating proportional value, indicating a need to assess capital allocation effectiveness and operating performance.

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 exhibited a fluctuating trend over the analyzed periods. It started at a high of 8132 million USD, decreased to 7506 million USD in the subsequent period, then peaked significantly at 11684 million USD. Following that peak, there was a gradual decline over the next three periods, reaching a low of 7032 million USD by the last reported date.

Invested Capital

Invested capital showed an overall upward trajectory, rising substantially from 36678 million USD to 72841 million USD over the span of the data. There was a notable increase between the first two periods, followed by minor fluctuations and steady growth through to the end of the series.

Economic Spread Ratio

The economic spread ratio demonstrated a highly variable pattern. It began at 22.17%, decreased to 15.02%, then sharply increased to 24.19%. Subsequently, the ratio declined over the following years, reaching a low point of 9.65% at the final period, indicating a narrowing spread relative to invested capital.

Overall Insights

While invested capital consistently increased, both economic profit and the economic spread ratio experienced volatility, with initial strong values followed by declining trends in recent periods. The decline in economic profit alongside increasing invested capital suggests diminishing returns on the invested capital base. Similarly, the reduction in economic spread ratio over time indicates a decreasing efficiency in generating economic profit relative to the amount of capital invested. This trend could imply increasing costs, competitive pressures, or operational challenges impacting profitability.

The financial data reveals notable trends over the analyzed periods. Adjusted net sales exhibit a consistent upward trajectory, increasing from $110,559 million in early 2020 to $159,362 million in early 2025, indicating steady revenue growth over the six-year span.

Economic profit, while generally positive throughout the periods, demonstrates fluctuations with a peak in 2022 at $11,684 million, followed by a gradual decline reaching $7,032 million in 2025. This trend suggests that despite increasing sales, the company's excess returns above its cost of capital have diminished in recent years.

The economic profit margin further highlights this dynamic, starting at 7.36% in 2020, dipping to 5.65% in 2021, rebounding to 7.69% in 2022, then experiencing a steady decrease to 4.41% by 2025. This pattern implies a decreasing efficiency in converting sales into economic profit, which may be influenced by rising costs, increased competition, or other operational factors.

Adjusted Net Sales

Consistently increased over the six-year period, showing strong revenue growth.

Economic Profit

Peaked in 2022 but declined thereafter, indicating variable profitability despite increasing sales.

Economic Profit Margin

Fluctuated with an initial dip, a peak in 2022, then a continuous decline, reflecting a decrease in the proportion of economic profit relative to sales.