Home Depot Inc. (NYSE:HD)

Net Operating Profit After Taxes (NOPAT)

The NOPAT shows an overall upward trend from 12,860 million US dollars in February 2020 to a peak of 18,170 million in January 2023. Following this peak, there is a decline to 16,384 million in January 2024, with a slight recovery to 16,730 million by February 2025. This suggests robust profitability growth initially, followed by some pressure on operating profits in the last two reported years.

Cost of Capital

The cost of capital exhibits minor fluctuations, starting at 12.93% in February 2020 and reaching 13.64% in January 2024, then slightly decreasing to 13.36% by February 2025. The changes are relatively small but indicate a moderately increasing cost environment over the period.

Invested Capital

Invested capital shows a significant increase from 36,678 million US dollars in February 2020 to 72,841 million in February 2025. Notably, there was a sharp rise between January 2024 and February 2025, indicating substantial asset or investment growth during that timeframe. Despite some fluctuations in earlier years, the overall trend is strongly upward, suggesting an expansion in the capital base.

Economic Profit

Economic profit, representing the value created beyond the cost of capital, follows a non-linear pattern. It started at 8,116 million US dollars in February 2020, dipped slightly in the following year, then increased to a peak of 11,661 million in January 2022. Afterward, it declined steadily to 6,999 million by February 2025. This downward trend in economic profit despite increasing invested capital signals potential challenges in generating returns above the cost of capital in recent years.

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 exhibits a fluctuating trend over the observed periods. Starting at $8,116 million in February 2020, it decreases to $7,483 million in January 2021 before rising sharply to $11,661 million in January 2022. Subsequently, there is a gradual decline to $10,836 million in January 2023, further dropping to $8,762 million in January 2024, and reaching its lowest at $6,999 million in February 2025. This indicates an overall downward trajectory in economic profit towards the end of the period despite an earlier peak.

Invested Capital

Invested capital demonstrates a consistent upward trend throughout the periods. Beginning at $36,678 million in February 2020, it increases significantly to $49,973 million by January 2021. A slight decrease is observed in January 2022 to $48,299 million, followed by an increase again to $55,111 million in January 2023. The upward movement continues with $55,884 million in January 2024 and peaks at $72,841 million in February 2025. This reflects a sustained expansion in invested capital over the analyzed years.

Economic Spread Ratio

The economic spread ratio shows a declining pattern overall, with short-term fluctuations. It starts at 22.13% in February 2020 and decreases sharply to 14.97% in January 2021. Subsequently, it rebounds to 24.14% in January 2022 but then declines to 19.66% in January 2023 and further down to 15.68% in January 2024. By February 2025, it reaches 9.61%, the lowest point observed in the dataset. This trend suggests diminishing efficiency or return relative to the invested capital over time.

The financial data reveals several notable trends over the six-year period. Adjusted net sales exhibit a general upward trajectory, increasing steadily from 110,559 million US dollars in early 2020 to 159,362 million US dollars in early 2025. This growth suggests a consistent expansion in revenue generation.

Conversely, economic profit displays a more fluctuating pattern, with an initial decrease from 8,116 million US dollars in 2020 to 7,483 million in 2021, followed by a significant rise to 11,661 million in 2022. After this peak, economic profit gradually declines to 6,999 million by 2025. This volatility indicates varying profitability despite the growth in sales.

The economic profit margin percentage complements this observation. It starts at 7.34% in 2020, dips to a low of 5.63% in 2021, then climbs back to 7.68% in 2022, followed by a steady decrease each subsequent year, reaching 4.39% in 2025. This downward trend in margin, especially in the latter years, may point to increasing costs, pricing pressures, or changes in efficiency impacting profitability relative to sales.

Adjusted Net Sales

Consistent increase over six years, rising approximately 44% from 2020 to 2025, indicating strong top-line growth.

Economic Profit

Variability observed with a peak in 2022, followed by a notable decline through 2025, suggesting fluctuating underlying profitability.

Economic Profit Margin

Initial decline in 2021, recovery in 2022, then continuous erosion through 2025 to the lowest margin in the period, highlighting potential challenges in maintaining profitability as sales grow.

Overall, while sales have increased substantially, the decreasing economic profit margin and the decline in economic profit after 2022 highlight a need for careful analysis of cost structures and operational efficiencies to sustain profitability in the future.