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.
Economic Profit
Lowe’s Cos. Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2026 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 8,308 – 14.76% × 36,866 = 2,865
The analysis of economic profit over the six-year period reveals a consistent ability to generate value above the cost of capital, although the magnitude of this value creation has experienced significant volatility. Economic profit reached a peak in 2022 before entering a period of fluctuation and a subsequent decline by 2026.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited substantial volatility, peaking at 9,827 million US$ in 2022. A sharp contraction followed in 2023, falling to 7,020 million US$, before recovering to a range between 8,137 million US$ and 8,789 million US$ from 2024 through 2026. This suggests a period of high operating performance in 2022, followed by a stabilization of earning capacity in the latter years.
- Invested Capital Trends
- Invested capital followed a downward trajectory from 2021 to 2023, decreasing from 28,534 million US$ to 24,710 million US$. A gradual increase was observed through 2025, culminating in a significant surge to 36,866 million US$ by January 30, 2026. This substantial increase in the capital base in the final year represents a major shift in the company's asset utilization or investment strategy.
- Cost of Capital Stability
- The cost of capital remained relatively stable throughout the analyzed period, fluctuating within a narrow band between 14.76% and 15.80%. A slight downward trend is observable toward the end of the period, reaching its lowest point of 14.76% in 2026.
- Economic Profit Dynamics
- Economic profit peaked in 2022 at 5,672 million US$, driven by the simultaneous occurrence of peak NOPAT and a reduction in invested capital. While the figure remained positive through 2026, a marked decline to 2,865 million US$ occurred in the final year. This decline is primarily attributable to the sharp increase in invested capital, which raised the total cost of capital charge and offset the relative stability of NOPAT.
In summary, while the organization consistently maintained a positive economic profit, the efficiency of value creation diminished by 2026. The expansion of the invested capital base in the final year has not yet been matched by a proportional increase in operating profits, leading to a compression of economic value added.
AI Ask an analyst for more
Net Operating Profit after Taxes (NOPAT)
Lowe’s Cos. Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in deferred revenue.
3 Addition of increase (decrease) in equity equivalents to net earnings.
4 2026 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 4,756 × 4.43% = 211
5 2026 Calculation
Tax benefit of interest expense, net of amount capitalized = Adjusted interest expense, net of amount capitalized × Statutory income tax rate
= 1,738 × 21.00% = 365
6 Addition of after taxes interest expense to net earnings.
7 2026 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 121 × 21.00% = 25
8 Elimination of after taxes investment income.
Net operating profit after taxes (NOPAT) exhibited a generally positive trajectory over the observed period, though with some fluctuation. Initial values demonstrate growth followed by a period of decline and subsequent stabilization. A comparison with net earnings reveals distinct patterns in profitability.
- Overall NOPAT Trend
- NOPAT increased from US$7,056 million in January 2021 to a peak of US$9,827 million in January 2022, representing a substantial year-over-year increase. Following this peak, NOPAT decreased to US$7,020 million in February 2023, nearly returning to the level observed in 2021. A subsequent recovery occurred, with NOPAT reaching US$8,789 million in February 2024. The trend then moderates, with values of US$8,137 million and US$8,308 million reported for January 2025 and January 2026, respectively.
- NOPAT vs. Net Earnings
- While both NOPAT and net earnings generally moved in the same direction, the magnitude of change differed. The increase from 2021 to 2022 was more pronounced for net earnings (44.5% increase) than for NOPAT (39.3% increase). Conversely, the decline from 2022 to 2023 was more significant for net earnings (23.8% decrease) than for NOPAT (3.1% decrease). This divergence suggests that factors beyond core operating profitability, such as financing costs or non-operating items, significantly impacted net earnings.
- Recent Performance
- The most recent two years (January 2025 and January 2026) show a relatively stable NOPAT, fluctuating within a narrow range of US$8,137 million to US$8,308 million. This suggests a potential plateauing of operating profitability or a balancing of offsetting factors affecting NOPAT.
In summary, NOPAT demonstrated initial strong growth, followed by a correction, and then a period of stabilization. The relationship between NOPAT and net earnings indicates that non-operating factors play a role in overall profitability.
AI Ask an analyst for more
Cash Operating Taxes
Lowe’s Cos. Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
The income tax provision and cash operating taxes exhibited fluctuating behavior over the observed period. Both metrics initially increased before demonstrating a subsequent decline.
- Income Tax Provision
- The income tax provision increased from US$1,904 million in 2021 to US$2,766 million in 2022, representing a substantial rise. This was followed by a decrease to US$2,599 million in 2023 and a further reduction to US$2,449 million in 2024. The trend continued with a decline to US$2,196 million in 2025 and US$2,093 million in 2026. This indicates a consistent downward trend in reported income tax provision over the latter half of the period.
- Cash Operating Taxes
- Cash operating taxes mirrored the general trend of the income tax provision. An increase was observed from US$2,217 million in 2021 to US$2,847 million in 2022. The value peaked at US$3,055 million in 2023 before decreasing to US$2,771 million in 2024. Further declines were recorded in 2025 (US$2,501 million) and 2026 (US$2,169 million), demonstrating a consistent reduction in cash taxes paid.
- Relationship between Metrics
- Cash operating taxes consistently exceeded the income tax provision throughout the entire period. The difference between the two metrics remained relatively stable, fluctuating between approximately US$300 million and US$400 million annually. This suggests that timing differences related to tax payments and accruals are a consistent feature of the company’s tax position.
- Overall Trend
- From 2022 to 2026, both the income tax provision and cash operating taxes experienced a net decrease. The rate of decline appeared to accelerate in the later years of the period, particularly from 2024 to 2026. This could be attributable to changes in tax laws, improved tax planning strategies, or shifts in the company’s profitability and taxable income.
AI Ask an analyst for more
Invested Capital
Lowe’s Cos. Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of deferred revenue.
4 Addition of equity equivalents to shareholders’ equity (deficit).
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of investments.
The reported invested capital demonstrates fluctuations over the observed period. Initially, a decrease is noted, followed by a period of relative stability, and then a significant increase towards the end of the timeframe. A closer examination of the components contributing to invested capital reveals key trends in the company’s financial structure.
- Total Debt & Leases
- Total reported debt and leases exhibits a consistent upward trajectory from 2021 to 2024, increasing from US$26,211 million to US$40,145 million. A slight decrease is observed in 2025 to US$39,678 million, but this is followed by a further increase to US$44,677 million in 2026. This suggests an increasing reliance on debt financing over the period.
- Shareholders’ Equity
- Shareholders’ equity experiences a substantial decline throughout the period. Beginning with a positive value of US$1,437 million in 2021, it transitions to a deficit by 2022, reaching a deficit of US$4,816 million. This negative trend continues, with the deficit deepening to US$15,050 million in 2024, before a modest improvement to a deficit of US$9,917 million in 2026. This indicates a consistent erosion of equity value.
- Invested Capital Trend
- Invested capital decreased from US$28,534 million in 2021 to US$24,710 million in 2023. It then stabilized, fluctuating between US$25,913 million and US$26,276 million in 2024 and 2025, respectively. A notable increase is observed in 2026, with invested capital rising to US$36,866 million. This final increase appears to be driven primarily by the increase in total debt and leases, offsetting the continued negative shareholders’ equity.
The interplay between debt and equity significantly influences the invested capital. The increasing debt levels, coupled with the declining shareholders’ equity, initially resulted in a decrease in invested capital. However, the substantial increase in debt in the later years ultimately drove the overall invested capital higher, despite the continued equity deficit. This pattern suggests a shift in the company’s capital structure towards greater debt financing.
AI Ask an analyst for more
Cost of Capital
Lowe’s Cos. Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 131,195) | 131,195) | ÷ | 173,249) | = | 0.76 | 0.76 | × | 18.46% | = | 13.98% | ||
| Debt3 | 37,298) | 37,298) | ÷ | 173,249) | = | 0.22 | 0.22 | × | 4.06% × (1 – 21.00%) | = | 0.69% | ||
| Operating lease liability4 | 4,756) | 4,756) | ÷ | 173,249) | = | 0.03 | 0.03 | × | 4.43% × (1 – 21.00%) | = | 0.10% | ||
| Total: | 173,249) | 1.00 | 14.76% | ||||||||||
Based on: 10-K (reporting date: 2026-01-30).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 130,350) | 130,350) | ÷ | 166,574) | = | 0.78 | 0.78 | × | 18.46% | = | 14.44% | ||
| Debt3 | 32,033) | 32,033) | ÷ | 166,574) | = | 0.19 | 0.19 | × | 3.97% × (1 – 21.00%) | = | 0.60% | ||
| Operating lease liability4 | 4,191) | 4,191) | ÷ | 166,574) | = | 0.03 | 0.03 | × | 4.28% × (1 – 21.00%) | = | 0.09% | ||
| Total: | 166,574) | 1.00 | 15.13% | ||||||||||
Based on: 10-K (reporting date: 2025-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 145,335) | 145,335) | ÷ | 182,827) | = | 0.79 | 0.79 | × | 18.46% | = | 14.67% | ||
| Debt3 | 33,268) | 33,268) | ÷ | 182,827) | = | 0.18 | 0.18 | × | 3.96% × (1 – 21.00%) | = | 0.57% | ||
| Operating lease liability4 | 4,224) | 4,224) | ÷ | 182,827) | = | 0.02 | 0.02 | × | 4.11% × (1 – 21.00%) | = | 0.08% | ||
| Total: | 182,827) | 1.00 | 15.32% | ||||||||||
Based on: 10-K (reporting date: 2024-02-02).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 113,624) | 113,624) | ÷ | 148,912) | = | 0.76 | 0.76 | × | 18.46% | = | 14.08% | ||
| Debt3 | 31,254) | 31,254) | ÷ | 148,912) | = | 0.21 | 0.21 | × | 3.86% × (1 – 21.00%) | = | 0.64% | ||
| Operating lease liability4 | 4,034) | 4,034) | ÷ | 148,912) | = | 0.03 | 0.03 | × | 3.78% × (1 – 21.00%) | = | 0.08% | ||
| Total: | 148,912) | 1.00 | 14.81% | ||||||||||
Based on: 10-K (reporting date: 2023-02-03).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 150,571) | 150,571) | ÷ | 181,324) | = | 0.83 | 0.83 | × | 18.46% | = | 15.33% | ||
| Debt3 | 26,096) | 26,096) | ÷ | 181,324) | = | 0.14 | 0.14 | × | 3.53% × (1 – 21.00%) | = | 0.40% | ||
| Operating lease liability4 | 4,657) | 4,657) | ÷ | 181,324) | = | 0.03 | 0.03 | × | 3.59% × (1 – 21.00%) | = | 0.07% | ||
| Total: | 181,324) | 1.00 | 15.80% | ||||||||||
Based on: 10-K (reporting date: 2022-01-28).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 130,462) | 130,462) | ÷ | 159,901) | = | 0.82 | 0.82 | × | 18.46% | = | 15.06% | ||
| Debt3 | 25,008) | 25,008) | ÷ | 159,901) | = | 0.16 | 0.16 | × | 3.74% × (1 – 21.00%) | = | 0.46% | ||
| Operating lease liability4 | 4,431) | 4,431) | ÷ | 159,901) | = | 0.03 | 0.03 | × | 3.88% × (1 – 21.00%) | = | 0.08% | ||
| Total: | 159,901) | 1.00 | 15.61% | ||||||||||
Based on: 10-K (reporting date: 2021-01-29).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Lowe’s Cos. Inc., economic spread ratio calculation, comparison to benchmarks
| Jan 30, 2026 | Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 2,865) | 4,161) | 4,820) | 3,361) | 5,672) | 2,602) | |
| Invested capital2 | 36,866) | 26,276) | 25,913) | 24,710) | 26,296) | 28,534) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 7.77% | 15.83% | 18.60% | 13.60% | 21.57% | 9.12% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Amazon.com Inc. | — | -1.71% | -5.35% | -10.87% | -21.81% | -2.05% | |
| Home Depot Inc. | 4.55% | 6.81% | 12.79% | 16.86% | 21.31% | 12.15% | |
| TJX Cos. Inc. | 8.33% | 7.39% | 7.13% | 4.19% | 4.21% | -12.64% | |
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 Economic profit. See details »
2 Invested capital. See details »
3 2026 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,865 ÷ 36,866 = 7.77%
4 Click competitor name to see calculations.
Analysis of the economic value added metrics indicates a period of high volatility in value creation efficiency, concluding with a marked contraction in the economic spread ratio by January 2026.
- Economic Spread Ratio Performance
- The economic spread ratio experienced a sharp increase from 9.12% in January 2021 to a peak of 21.57% in January 2022. Following this peak, the ratio entered a phase of fluctuation, recording 13.60% in 2023 and 18.60% in 2024, before moderately declining to 15.83% in 2025. A significant downturn is observed by January 2026, where the ratio fell to 7.77%, representing the lowest level of efficiency in the analyzed timeframe.
- Economic Profit Trends
- Economic profit exhibited an inconsistent trajectory over the six-year period. A substantial peak of US$ 5,672 million was achieved in January 2022, followed by a decline to US$ 3,361 million in 2023. Although a recovery to US$ 4,820 million occurred in 2024, a subsequent downward trend is evident, with profit decreasing to US$ 4,161 million in 2025 and further dropping to US$ 2,865 million by January 2026.
- Invested Capital Dynamics
- Invested capital remained relatively stable from January 2021 through January 2025, oscillating between a high of US$ 28,534 million and a low of US$ 24,710 million. However, a sharp expansion occurred in January 2026, with invested capital increasing to US$ 36,866 million. The simultaneous increase in the capital base and the decrease in economic profit contributed to the severe compression of the economic spread ratio in the final period.
AI Ask an analyst for more
Economic Profit Margin
Lowe’s Cos. Inc., economic profit margin calculation, comparison to benchmarks
| Jan 30, 2026 | Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 2,865) | 4,161) | 4,820) | 3,361) | 5,672) | 2,602) | |
| Net sales | 86,286) | 83,674) | 86,377) | 97,059) | 96,250) | 89,597) | |
| Add: Increase (decrease) in deferred revenue | 113) | (7) | (171) | (237) | 414) | 514) | |
| Adjusted net sales | 86,399) | 83,667) | 86,206) | 96,822) | 96,664) | 90,111) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 3.32% | 4.97% | 5.59% | 3.47% | 5.87% | 2.89% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Amazon.com Inc. | — | -1.13% | -3.13% | -6.13% | -11.39% | -0.88% | |
| Home Depot Inc. | 2.27% | 3.11% | 4.69% | 5.92% | 6.77% | 4.57% | |
| TJX Cos. Inc. | 3.45% | 2.96% | 2.77% | 1.71% | 1.71% | -8.80% | |
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 Economic profit. See details »
2 2026 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × 2,865 ÷ 86,399 = 3.32%
3 Click competitor name to see calculations.
The analysis of economic value added indicators reveals a period of significant volatility in both absolute economic profit and efficiency margins between 2021 and 2026.
- Economic Profit Trends
- Absolute economic profit experienced a sharp increase from US$ 2,602 million in 2021 to a peak of US$ 5,672 million in 2022. Following this peak, values fluctuated, dropping to US$ 3,361 million in 2023 before recovering to US$ 4,820 million in 2024. A consistent downward trajectory is observed in the final two years, with profit decreasing to US$ 4,161 million in 2025 and further to US$ 2,865 million by January 30, 2026.
- Adjusted Net Sales Performance
- Revenue patterns show an initial growth phase, peaking at US$ 96,822 million in February 2023. A subsequent contraction occurred through 2024 and 2025, reaching a low of US$ 83,667 million. A marginal recovery to US$ 86,399 million was recorded in 2026, although sales remained significantly below the peaks observed between 2022 and 2023.
- Economic Profit Margin Analysis
- The economic profit margin exhibits high volatility, closely mirroring the fluctuations in absolute profit. The margin peaked at 5.87% in 2022 and saw a secondary spike to 5.59% in 2024. Notably, the 2024 margin expansion occurred despite a decrease in adjusted net sales, suggesting an improvement in capital utilization efficiency or a reduction in the cost of capital during that period. However, the margin declined to 3.32% by 2026, indicating a compression in value creation relative to sales.
Overall, the data indicates that while there were periods of enhanced economic efficiency, the most recent trend suggests a decline in the company's ability to generate economic profit relative to its sales volume.
AI Ask an analyst for more