Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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Lockheed Martin Corp. pages available for free this week:
- Balance Sheet: Assets
- Cash Flow Statement
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Net Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Price to Earnings (P/E) since 2005
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Return on Invested Capital (ROIC)
Lockheed Martin Corp., ROIC 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, 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 NOPAT. See details »
2 Invested capital. See details »
3 2024 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data over the five-year period indicates notable fluctuations in the key performance metrics. Net operating profit after taxes (NOPAT) demonstrates variability, with an initial decline from 7,202 million US dollars in 2020 to 5,745 million US dollars in 2022, followed by a recovery to 6,983 million in 2023, and a subsequent decrease to 5,464 million in 2024.
Invested capital shows a relatively stable pattern, fluctuating slightly around the range of approximately 26,600 to 28,800 million US dollars. It decreased from 28,054 million in 2020 to 26,603 million in 2022, then increased again to 28,784 million by 2024.
The return on invested capital (ROIC) mirrors the trends observed in NOPAT, beginning from a high of 25.67% in 2020, declining steadily to 21.6% by 2022, rebounding to 25.46% in 2023, and then falling significantly to 18.98% in 2024. This declining ROIC in the final year suggests a reduced efficiency in generating returns from invested capital compared to earlier years.
- Net Operating Profit After Taxes (NOPAT)
- Displayed a downward trend from 2020 to 2022, a partial recovery in 2023, and a sharp decrease in 2024.
- Invested Capital
- Remained relatively stable with minor fluctuations, decreasing in the early years and rising back toward the initial levels by 2024.
- Return on Invested Capital (ROIC)
- Followed a pattern of decline through 2022, recovery in 2023, and a pronounced drop in 2024, indicating fluctuating profitability relative to the capital employed.
Overall, the data reflects a cyclical pattern in profitability and efficiency measures, with a concern arising from the drop in ROIC and NOPAT in 2024, which may warrant further investigation regarding operational challenges or changes in market conditions impacting the company’s returns on its invested capital.
Decomposition of ROIC
Lockheed Martin Corp., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × |
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 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The financial data reveals notable fluctuations and trends across key performance metrics over the course of five years.
- Operating Profit Margin (OPM)
- The operating profit margin exhibited a declining trend from 13.19% in 2020 down to 11.6% in 2022, indicating a reduction in operating efficiency or increased operating expenses during this period. However, the margin improved to 13.04% in 2023 before dropping again significantly to 10.03% in 2024. This recent decline suggests challenges in maintaining profitability from operations towards the end of the observed period.
- Turnover of Capital (TO)
- The turnover of capital remained relatively stable throughout the five years, fluctuating slightly around an average of approximately 2.41. The metric changed marginally from 2.33 in 2020 to 2.47 in 2024, indicating a consistent level of efficiency in utilizing capital to generate revenue over time with no major disruptions.
- 1 – Effective Cash Tax Rate (CTR)
- This metric demonstrated a gradual decrease from 83.49% in 2020 to 75.05% in 2022, suggesting a reduction in the effective cash tax rate over this period. A slight recovery was observed in 2023 with an increase to 79.28%, followed by a moderate decline again to 76.67% in 2024. These fluctuations suggest changes in tax strategies, tax law impacts, or shifts in pre-tax earnings affecting the tax burden across years.
- Return on Invested Capital (ROIC)
- The ROIC showed a decreasing trend from a peak of 25.67% in 2020 to 21.6% in 2022, signaling a decline in the efficiency of capital utilization to generate returns. Nevertheless, a rebound occurred in 2023 with a rise back to 25.46%, closely approaching the initial level. This was followed by a sharp decline to 18.98% in 2024, indicating weakened profitability or higher invested capital without proportional return in the latest year.
Overall, the company experienced moderate volatility in profitability and capital return metrics, with particularly notable declines in operating margin and ROIC in the final year. Capital turnover remained stable, reflecting consistent asset utilization. Variability in the effective cash tax rate potentially influenced net profitability across the timeframe. These insights suggest areas for management focus to improve operational efficiency and capital returns going forward.
Operating Profit Margin (OPM)
Lockheed Martin Corp., OPM 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, 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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
OPM = 100 × NOPBT ÷ Net sales
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibited fluctuations over the five-year period. Starting at 8,626 million USD in 2020, it declined for two consecutive years, reaching 7,655 million USD in 2022. This was followed by a rebound to 8,808 million USD in 2023. However, a notable decrease occurred in 2024, where the figure fell to 7,126 million USD. Overall, the trend suggests variability with an absence of sustained growth in profitability before taxes.
- Net Sales
- Net sales demonstrated a generally positive trend through the years, increasing from 65,398 million USD in 2020 to 67,044 million USD in 2021. Although there was a slight dip in 2022 to 65,984 million USD, sales rose consistently thereafter, culminating at 71,043 million USD in 2024. This indicates an overall growth in revenue-generating capability despite minor setbacks.
- Operating Profit Margin (OPM)
- The operating profit margin mirrored the fluctuations observed in net operating profit before taxes. Starting at 13.19% in 2020, the margin declined steadily to 11.6% in 2022, indicating a reduction in operational efficiency or increased costs relative to sales during that period. It recovered to 13.04% in 2023, suggesting operational improvements or cost management, before dropping sharply to 10.03% in 2024. This downward shift in the latest year points to potential challenges in maintaining profitability relative to revenue.
- Summary of Trends
- Overall, the data reveals that while sales increased over the five years, profitability metrics did not consistently improve. The company experienced volatility in operating profit margins and net operating profit before taxes, indicating fluctuations in operational efficiency or cost structures. The decline in profitability ratios in the latest reported year may warrant further investigation into cost management, market conditions, or other external factors impacting financial performance.
Turnover of Capital (TO)
Lockheed Martin Corp., TO 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) | ||||||
| Net sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, 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 Invested capital. See details »
2 2024 Calculation
TO = Net sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Net Sales
- The net sales exhibit a generally increasing trend over the five-year period. Starting at 65,398 million USD in 2020, sales rose to 67,044 million USD in 2021, followed by a slight decline to 65,984 million USD in 2022. Subsequently, net sales resumed their upward trajectory, reaching 67,571 million USD in 2023 and further growing to 71,043 million USD in 2024. Overall, this indicates steady revenue growth with a minor dip in 2022.
- Invested Capital
- Invested capital demonstrates some variability but remains relatively stable across the years. It began at 28,054 million USD in 2020, moved upward to 28,620 million USD in 2021, then declined to 26,603 million USD in 2022. After this drop, the invested capital increased again to 27,427 million USD in 2023 and to 28,784 million USD in 2024, nearly reaching its highest point by the end of the period. This suggests a moderate fluctuation in capital investment with a recovery trend in the latter years.
- Turnover of Capital (TO)
- The turnover of capital ratio remained relatively stable with a slight upward progression. It started at 2.33 in 2020 and marginally increased to 2.34 in 2021. The ratio experienced a noticeable improvement to 2.48 in 2022, then slightly decreased to 2.46 in 2023, followed by a minor rise to 2.47 in 2024. These values indicate a consistent efficiency in utilizing invested capital to generate sales, with an overall positive tendency.
Effective Cash Tax Rate (CTR)
Lockheed Martin Corp., CTR 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, 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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data reveals several key trends in operating performance and tax-related metrics over the five-year period ending in 2024.
- Cash Operating Taxes
- Cash operating taxes increased from 1424 million US dollars in 2020 to a peak of 1910 million in 2022, representing a marked upward trend over the first three years. However, there was a subsequent decline to 1825 million in 2023 and a further decrease to 1662 million in 2024. This pattern suggests an overall rise in tax expenses initially, followed by a moderate reduction in the last two years of the period.
- Net Operating Profit Before Taxes (NOPBT)
- The NOPBT declined from 8626 million in 2020 to 7942 million in 2021, continuing downward to 7655 million in 2022. A notable recovery occurred in 2023, where NOPBT increased significantly to 8808 million, surpassing the 2020 level. However, in 2024, NOPBT dropped sharply to 7126 million, the lowest level in the five-year span. This volatility may indicate fluctuating operational efficiencies or changing market conditions impacting profitability before tax.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate exhibited an upward trajectory from 16.51% in 2020 to 18.89% in 2021, followed by a substantial rise to 24.95% in 2022. The rate then decreased to 20.72% in 2023 but rose again to 23.33% in 2024. This oscillation indicates variability in the tax burden relative to operating profits, possibly reflecting changes in tax legislation, tax planning strategies, or shifts in geographic earnings composition.
In summary, the data indicates that while net operating profit before taxes showed some resilience with a peak in 2023, the subsequent decline in 2024 signals challenges in maintaining profitability. The tax expenses and effective tax rate trends suggest increasing tax pressure in earlier years, somewhat alleviated but still elevated in later years, influencing overall after-tax operating results.