Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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Lockheed Martin Corp. pages available for free this week:
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Enterprise Value (EV)
- Enterprise Value to FCFF (EV/FCFF)
- Operating Profit Margin since 2005
- Debt to Equity since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
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Economic Profit
Lockheed Martin Corp., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT declined from 7,202 million USD in 2020 to 5,464 million USD in 2024, reflecting an overall decreasing trend with fluctuations. There was a notable drop from 2020 to 2022, followed by a recovery in 2023 before decreasing again in 2024.
- Cost of Capital
- The cost of capital showed a slight upward trend from 8.62% in 2020 to 8.86% in 2022, then decreased gradually to 8.65% in 2024, indicating minor variations but maintaining a relatively stable range throughout the period.
- Invested Capital
- Invested capital exhibited moderate fluctuations over the years. It increased from 28,054 million USD in 2020 to a peak of 28,784 million USD in 2024, with a dip observed in 2022 at 26,603 million USD followed by recovery in subsequent years.
- Economic Profit
- Economic profit decreased from 4,784 million USD in 2020 to 2,975 million USD in 2024, showing a declining trend characterized by a trough in 2022 and some recovery in 2023, but not reaching the initial levels seen in 2020.
Net Operating Profit after Taxes (NOPAT)
Lockheed Martin Corp., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in equity equivalents to net earnings.
3 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
4 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
5 Addition of after taxes interest expense to net earnings.
6 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
7 Elimination of after taxes investment income.
8 Elimination of discontinued operations.
- Net Earnings
- The net earnings demonstrate a fluctuating trend over the reported periods. Initially, there is a decrease from 6,833 million USD in 2020 to 6,315 million USD in 2021, followed by a further decline to 5,732 million USD in 2022. However, a recovery is observed in 2023 with net earnings rising to 6,920 million USD. In 2024, the net earnings again decline to 5,336 million USD. Overall, the net earnings exhibit volatility with no consistent upward or downward pattern.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT values mirror the pattern seen in net earnings, suggesting a close relationship between operating profitability and net results. It starts at 7,202 million USD in 2020 and decreases steadily to 6,442 million USD in 2021 and 5,745 million USD in 2022. Similar to net earnings, NOPAT increases in 2023 to 6,983 million USD, then declines in 2024 to 5,464 million USD. This pattern indicates variations in operational efficiency and profitability impacting after-tax operating profit.
Cash Operating Taxes
Lockheed Martin Corp., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Federal and foreign income tax expense
- The federal and foreign income tax expense shows a fluctuating downward trend over the five-year period. Starting at 1,347 million US dollars in 2020, it decreased to 1,235 million in 2021 and further declined to 948 million in 2022. There was a slight recovery to 1,178 million in 2023, followed by another decline to 884 million in 2024. Overall, the tax expense decreased notably from 2020 to 2024, indicating potential changes in income levels, tax rates, or tax planning strategies.
- Cash operating taxes
- The cash operating taxes exhibit a clear upward trend for the initial three years, increasing from 1,424 million US dollars in 2020 to a peak of 1,910 million in 2022. Post-2022, there is a declining trend with amounts falling to 1,825 million in 2023 and further to 1,662 million in 2024. Despite the recent decreases, the overall level of cash operating taxes in 2024 remains higher than in 2020, suggesting higher operational tax outflows over the medium term, possibly due to increased taxable income or changes in tax payment schedules.
Invested Capital
Lockheed Martin Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of equity equivalents to stockholders’ equity.
4 Removal of accumulated other comprehensive income.
5 Subtraction of construction in progress.
6 Subtraction of marketable securities.
- Total Reported Debt & Leases
-
The total reported debt and leases demonstrate a consistent upward trend over the analyzed period. Starting at 13,284 million USD in 2020, the amount slightly decreased to 13,076 million USD in 2021 but then increased significantly to 16,764 million USD in 2022. This growth continued in subsequent years, reaching 18,636 million USD in 2023 and further rising to 21,418 million USD by the end of 2024. This pattern indicates an increasing reliance on debt and leases as a component of the company’s financial structure.
- Stockholders’ Equity
-
Stockholders’ equity showed volatility during the reviewed timeframe. The value grew substantially from 6,015 million USD in 2020 to a peak of 10,959 million USD in 2021. However, a decline followed, dropping to 9,266 million USD in 2022. The downward trend persisted in 2023 and 2024, with equity decreasing further to 6,835 million USD and 6,333 million USD respectively. The decrease after 2021 suggests potential challenges in retained earnings or other equity components, affecting the company’s net worth from the shareholders’ perspective.
- Invested Capital
-
Invested capital fluctuated over the period under consideration. It started at 28,054 million USD in 2020, marginally increasing to 28,620 million USD in 2021. This was followed by a decline to 26,603 million USD in 2022, then a modest recovery to 27,427 million USD in 2023 and a subsequent increase to 28,784 million USD in 2024. The invested capital trend overall appears relatively stable with minor fluctuations, indicating ongoing capital investment activities that align with the company’s operational and strategic initiatives.
- Summary Observations
-
Overall, the financial data reveals a notable increase in leverage, with debt and leases rising considerably over the five years, potentially increasing financial risk. Meanwhile, stockholders’ equity exhibited significant growth initially but suffered a steady decline after 2021, which may signal profitability or capital structure concerns. Invested capital remained comparatively stable, suggesting consistent reinvestment in the company’s asset base despite the observed fluctuations. These patterns might reflect strategic decisions affecting financial policy, capital structure, and risk management.
Cost of Capital
Lockheed Martin Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Lockheed Martin Corp., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data reveals several notable trends over the analyzed periods. Economic profit exhibited a generally declining trajectory from 2020 through 2022, decreasing from $4,784 million to $3,387 million. A rebound was observed in 2023, with economic profit rising to $4,597 million, followed by a subsequent decline to $2,975 million in 2024. This pattern indicates fluctuations in profitability, with a pronounced dip in the last reported year.
Invested capital showed more stability but with some variability. After a slight increase from $28,054 million in 2020 to $28,620 million in 2021, it decreased to $26,603 million in 2022, before rising again in the subsequent years to reach $28,784 million by 2024. This suggests periodic adjustments in the company's capital investment strategies or asset base.
The economic spread ratio, which measures the return relative to the cost of capital, paralleled the trend seen in economic profit. It started at 17.05% in 2020 and dropped progressively to 12.73% in 2022. A resurgence to 16.76% occurred in 2023, but this was followed by a significant decline to 10.33% in 2024. The spread ratio's volatility reflects changes in operational efficiency or cost structure impacting the company’s value creation ability.
- Economic profit
- Displayed a downward trend with recovery in 2023, but a notable downturn in 2024 indicating volatile profitability.
- Invested capital
- Experienced moderate fluctuations but remained relatively stable around $27-$29 billion, implying consistent capital deployment with some adjustments.
- Economic spread ratio
- Mirrored economic profit trends; starting high, falling, peaking again, and ending lower, signaling varying effectiveness in generating returns above cost of capital.
Economic Profit Margin
Lockheed Martin Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Net sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Net Sales
- The net sales exhibit a general upward trend over the five-year period. Starting from approximately 65.4 billion USD in 2020, net sales increased each year except for a slight decline in 2022, before reaching a peak of about 71 billion USD in 2024. The overall growth indicates a positive trajectory in revenue generation despite some fluctuations.
- Economic Profit
- The economic profit shows a downward trend from 2020 to 2022, decreasing from roughly 4.8 billion USD to about 3.4 billion USD. There is a notable recovery in 2023, with economic profit rising back to nearly 4.6 billion USD, but this gains momentum does not continue into 2024, where it declines again to approximately 3 billion USD. This pattern suggests volatility in profitability beyond net sales growth.
- Economic Profit Margin
- The economic profit margin follows a similar pattern to economic profit, starting at 7.32% in 2020 and falling steadily through 2022 to 5.13%. In 2023, it shows improvement, climbing to 6.8%, but then declines significantly to 4.19% in 2024. This indicates that while revenue increased, the efficiency or profitability relative to sales has weakened by the end of the period.