Home Depot Inc. (NYSE:HD)

The data reflects the financial performance and capital efficiency over six consecutive years, highlighting key metrics such as net operating profit after taxes (NOPAT), cost of capital, invested capital, and economic profit.

Net Operating Profit After Taxes (NOPAT)

NOPAT shows an overall upward trend from 12,860 million USD in 2020 to a peak of 18,170 million USD in 2023. However, this is followed by a decline to 16,384 million USD in 2024, with a slight recovery to 16,730 million USD in 2025. This pattern indicates strong profit growth initially, peaking in 2023, before experiencing some pressure or possibly higher expenses or market challenges leading to the decrease.

Cost of Capital

The cost of capital remained relatively stable across the period, fluctuating modestly between 13.08% and 13.80%. The highest point was in 2024 at 13.80%, which may have impacted the firm's economic profit that year. The consistency suggests a stable financing environment or capital structure.

Invested Capital

Invested capital increased steadily from 36,678 million USD in 2020 to 72,841 million USD in 2025, more than doubling. This significant growth indicates substantial reinvestment or capital expenditure to support business expansion or operational capacity increases. The jump between 2024 and 2025 is particularly marked, showing accelerated capital deployment.

Economic Profit

Economic profit, which measures value creation beyond the cost of capital, peaked at 11,586 million USD in 2022 before declining to 6,886 million USD in 2025. Despite increasing invested capital and relatively stable NOPAT, this downward trend in economic profit suggests diminishing returns on new investments or increased capital costs relative to returns. The decline from 2022 onward signals decreasing efficiency in generating excess returns above capital costs.

Overall, the data indicates robust profit growth and considerable investment activity until 2023-2024. However, the decline in economic profit and NOPAT in recent years, despite rising invested capital, suggests caution regarding the effectiveness of additional investments and challenges in sustaining previous levels of 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 a fluctuating trend over the periods analyzed. It initially declines from 8062 million USD in early 2020 to 7405 million USD in early 2021, followed by a significant increase to 11586 million USD by early 2022. Subsequently, it decreases to 10751 million USD in early 2023, continues to drop to 8673 million USD in early 2024, and further declines to 6886 million USD by early 2025. This suggests variability in profitability with a peak in early 2022 and a downward trend thereafter.

Invested Capital

The invested capital exhibits an overall increasing trend throughout the entire period. It rises notably from 36678 million USD in early 2020 to 49973 million USD in early 2021. Although there is a slight decrease to 48299 million USD in early 2022, it rebounds to 55111 million USD the following year and continues to increase to 55884 million USD in early 2024. The most substantial growth appears in early 2025, reaching 72841 million USD. This increasing trend indicates expanded capital deployment over time.

Economic Spread Ratio

The economic spread ratio displays a declining trend with some volatility. It starts at 21.98% in early 2020, then decreases notably to 14.82% by early 2021. It recovers to a peak of 23.99% in early 2022 before declining again to 19.51% in early 2023, 15.52% in early 2024, and further down to 9.45% by early 2025. This downward trajectory towards the end suggests diminishing returns relative to the cost of capital, despite fluctuations in prior years.

Overall Insights

The data indicates that while the company has consistently increased its invested capital over the years, economic profit has not followed a steady upward trend and has declined significantly after peaking in early 2022. Furthermore, the economic spread ratio's downward trend highlights a reduction in the efficiency of generating returns over invested capital, particularly in the most recent periods. This may reflect challenges in maintaining profitability relative to the growing capital base and could warrant further investigation into operational and market dynamics affecting performance.

Economic Profit

The economic profit demonstrates a fluctuating trend over the six-year period. Beginning at $8,062 million in 2020, it declined slightly to $7,405 million in 2021, then experienced a significant increase to $11,586 million in 2022. Subsequently, it decreased to $10,751 million in 2023, followed by further declines to $8,673 million in 2024 and $6,886 million in 2025. This pattern indicates variability in profitability with a peak in 2022, after which economic profit has consistently reduced each year.

Adjusted Net Sales

Adjusted net sales show a general upward trend throughout the period. Sales increased steadily from $110,559 million in 2020 to $132,817 million in 2021, then continued rising to $151,930 million in 2022 and $156,871 million in 2023. A minor decline occurred in 2024, with sales dipping to $152,367 million, but the trend resumed growth in 2025, reaching $159,362 million. Overall, sales growth is strong, albeit with a slight dip in 2024 accompanied by a recovery in the following year.

Economic Profit Margin

The economic profit margin follows a variable but generally declining trend over the observed period. Starting at 7.29% in 2020, it fell to 5.58% in 2021 before rebounding sharply to 7.63% in 2022. Subsequent years show a steady decline from 6.85% in 2023 to 5.69% in 2024, culminating at 4.32% in 2025. This decreasing margin, particularly from 2022 onwards, suggests that profitability relative to sales is diminishing despite rising sales figures.

Overall Analysis

The data indicates that while adjusted net sales have grown over the years, economic profit and economic profit margins have experienced volatility with recent downward trends. The peak in economic profit and margin in 2022 was followed by consistent declines, implying increased costs, reduced operational efficiency, or other factors negatively impacting profit generation relative to revenue. The diverging trends between rising sales and falling profit margins warrant further investigation into cost management and margin sustainability.