Economic Value Added (EVA)
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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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Lowe’s Cos. Inc. pages available for free this week:
- Income Statement
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Analysis of Solvency Ratios
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Current Ratio since 2005
- Price to Sales (P/S) since 2005
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Economic Profit
Lowe’s Cos. Inc., economic profit calculation
US$ in millions
| 12 months ended: | Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | |
|---|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | |||||||
| Cost of capital2 | |||||||
| Invested capital3 | |||||||
| Economic profit4 | |||||||
Based on: 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), 10-K (reporting date: 2020-01-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial data reveals several notable trends over the six-year period under review.
- Net Operating Profit After Taxes (NOPAT)
-
The NOPAT experienced a significant upward trajectory from 2020 through 2022, increasing from approximately $5.1 billion to nearly $9.8 billion, which indicates strong operational performance during these years. However, in 2023, the NOPAT declined sharply to about $7.0 billion, followed by a recovery trend in 2024 reaching roughly $8.8 billion, before decreasing again in 2025 to approximately $8.1 billion. This pattern suggests some volatility in profitability in the latter years after the initial growth period.
- Cost of Capital
-
The cost of capital percentage increased from 11.85% in 2020 to a peak of 14.01% in 2022, indicating a rising required return on investments, possibly due to higher perceived risk or changes in market conditions. This was followed by a moderate decline to 13.16% in 2023. In 2024 and 2025, the cost of capital stabilized around 13.6% and 13.44% respectively, showing some moderation but remaining elevated compared to the starting point.
- Invested Capital
-
Invested capital displayed a fluctuating trend. It rose modestly from about $26.7 billion in 2020 to $28.5 billion in 2021, then declined steadily to approximately $24.7 billion by early 2023. Thereafter, it gradually increased to around $26.3 billion in 2025. This suggests a period of capital reduction followed by cautious reinvestment or capital accumulation.
- Economic Profit
-
Economic profit exhibited a robust growth curve early in the period, nearly tripling from $1.9 billion in 2020 to over $6.1 billion in 2022, reflecting an increasingly profitable use of invested capital above the cost of capital. Despite a decline to $3.7 billion in 2023, economic profit rebounded to $5.3 billion in 2024 and slightly decreased to about $4.6 billion in 2025. The pattern of economic profit closely mirrors the NOPAT trend while being influenced by varying cost of capital and invested capital levels.
Overall, the data indicates that operational profitability improved markedly in the first half of the period, coupled with rising capital costs and fluctuating invested capital. In the later years, although profitability remained strong relative to the initial years, there were signs of volatility and adjustment in both operational income and capital deployment. The company's economic profit suggests it continued to create value above its cost of capital despite these fluctuations, but with periods of notable contraction and recovery.
Net Operating Profit after Taxes (NOPAT)
Lowe’s Cos. Inc., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-01-31).
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 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2025 Calculation
Tax benefit of interest expense, net of amount capitalized = Adjusted interest expense, net of amount capitalized × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net earnings.
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
- Net Earnings
- The net earnings of the company demonstrated a significant upward trend from 2020 to 2022, rising from 4,281 million US dollars to 8,442 million US dollars. This almost doubled the net earnings within a two-year period, indicating robust profitability. However, in 2023, there was a noticeable decline to 6,437 million US dollars, followed by a partial recovery in 2024 to 7,726 million US dollars. The most recent data for 2025 shows a decrease again to 6,957 million US dollars, suggesting some volatility or challenges impacting net earnings in the latter period.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT figures align with the general trend observed in net earnings. Starting at 5,097 million US dollars in 2020, NOPAT increased steadily through 2021 and peaked at 9,827 million US dollars in 2022. This indicates improved operational efficiency and profitability. Following the peak, NOPAT decreased to 7,020 million US dollars in 2023, then rose again to 8,789 million US dollars in 2024, before declining to 8,137 million US dollars in 2025. Although the fluctuations in NOPAT mirror those in net earnings, the values still reflect a relatively strong operating performance over the years.
Cash Operating Taxes
Lowe’s Cos. Inc., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-01-31).
The data reflects the annual figures for income tax provision and cash operating taxes over a six-year period. Both financial items show a general upward trend from 2020 to 2023, followed by a noticeable decline in the later years.
- Income Tax Provision
- The income tax provision increased significantly from 1,342 million USD in 2020 to a peak of 2,766 million USD in 2022. After 2022, the provision declined steadily to 2,196 million USD by 2025. This pattern suggests a rise in taxable income or tax liabilities initially, followed by effective tax management or reduced taxable income in the later years.
- Cash Operating Taxes
- Cash operating taxes also exhibit consistent growth, increasing from 1,386 million USD in 2020 to a peak of 3,055 million USD in 2023. Post-2023, these taxes decreased to 2,501 million USD by 2025. This trend aligns closely with the income tax provision pattern, indicating cash tax payments followed similar dynamics, perhaps influenced by timing differences or changes in tax regulations.
Overall, the data shows strong growth in tax-related expenses through early years, peaking around 2022-2023, with subsequent reductions suggesting strategic tax planning, fluctuations in earnings, or changes in tax rules that impacted both provision and cash taxes similarly.
Invested Capital
Lowe’s Cos. Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2020-01-31).
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 financial data reveals several notable trends over the periods analyzed. One prominent pattern is the consistent increase in total reported debt and leases from 23,750 million US dollars in early 2020 to a peak of 40,145 million US dollars in early 2024, followed by a slight reduction to 39,678 million US dollars in early 2025. This indicates a significant rise in the company's leverage over the five-year period, particularly between 2021 and 2024.
Shareholders' equity shows a concerning downward trajectory, decreasing from 1,972 million US dollars in early 2020 to a negative value starting in 2022. The deficit deepens sharply from -4,816 million US dollars in early 2022 to a low point around -15,050 million US dollars in early 2024, with a minor improvement to -14,231 million US dollars in early 2025. This negative equity position suggests substantial accumulated losses or other equity-reducing events, which may impact the company’s financial stability and shareholder confidence.
Invested capital fluctuates throughout the period, starting at 26,717 million US dollars in early 2020 and peaking at 28,534 million US dollars in early 2021. Subsequently, it declines to a low of 24,710 million US dollars in early 2023 before gradually increasing again to 26,276 million US dollars by early 2025. These movements reflect variations in the company’s long-term investments and financing structure, possibly influenced by the changes in debt and equity.
- Total Reported Debt & Leases
- Shows a strong upward trend from 2020 through 2024, increasing by approximately 69%, followed by a slight decrease in 2025.
- Shareholders’ Equity (Deficit)
- Transitions from positive equity into a growing deficit starting in 2022, with the deficit nearly tripling by 2024 and remaining substantial in 2025.
- Invested Capital
- Peaks in 2021, declines through 2023, then recovers modestly by 2025, suggesting adjustments in capital investment and financing.
Overall, the company exhibits increasing financial leverage and deteriorating equity over the analyzed period, which may reflect operational challenges, increased borrowing, or sustained losses. The minor recovery in invested capital in the later periods could indicate attempts to stabilize or improve financial structure. Close attention to the relationship between debt levels and equity is warranted to assess ongoing financial health and risk exposure.
Cost of Capital
Lowe’s Cos. Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-02-02).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-02-03).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-01-28).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-01-29).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Lowe’s Cos. Inc., economic spread ratio calculation, comparison to benchmarks
| Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| Economic spread ratio3 | |||||||
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Amazon.com Inc. | |||||||
| Home Depot Inc. | |||||||
| TJX Cos. Inc. | |||||||
Based on: 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), 10-K (reporting date: 2020-01-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- Economic profit exhibited a general upward trajectory from 1931 million US dollars in early 2020 to a peak of 6144 million in early 2022. Following this peak, there was a notable decline to 3769 million in early 2023. However, the figure rebounded to 5265 million in early 2024 before decreasing again to 4605 million by early 2025. Despite fluctuations, the overall trend reflects growth relative to the initial period, with significant variability in the mid-to-late timeframe.
- Invested Capital
- The invested capital demonstrated a fluctuating pattern, starting at 26717 million US dollars in early 2020 and increasing slightly to 28534 million in early 2021. Subsequently, there was a decline to 26296 million in early 2022 and further reductions to 24710 million in early 2023. The invested capital then experienced a moderate recovery, rising to 25913 million in early 2024 and finally reaching 26276 million in early 2025. Overall, invested capital remained relatively stable with minor fluctuations and a mild downward trend during the middle periods.
- Economic Spread Ratio
- The economic spread ratio, an indicator of the return generated over the cost of capital, showed considerable variability. It increased significantly from 7.23% in early 2020 to 23.36% in early 2022, indicating a period of improved profitability. Following this peak, the ratio declined to 15.25% in early 2023, then improved again to 20.32% in early 2024 before falling slightly to 17.53% in early 2025. The ratio suggests an overall positive trend in economic returns, although punctuated by some volatility in the later years.
- Summary of Trends
- The financial performance metrics indicate that the company experienced growth in economic profit and return on invested capital through the early years, peaking around 2022. This was followed by a period of correction with declines in economic profit and economic spread ratio in 2023. Invested capital showed a contraction during this timeframe but stabilized thereafter. The partial recovery in profitability measures post-2023 suggests efforts to enhance economic value, although variability remains. Overall, the data reflects cycles of expansion and contraction that may correspond to broader market conditions or operational adjustments.
Economic Profit Margin
Lowe’s Cos. Inc., economic profit margin calculation, comparison to benchmarks
| Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | |||||||
| Net sales | |||||||
| Add: Increase (decrease) in deferred revenue | |||||||
| Adjusted net sales | |||||||
| Performance Ratio | |||||||
| Economic profit margin2 | |||||||
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Amazon.com Inc. | |||||||
| Home Depot Inc. | |||||||
| TJX Cos. Inc. | |||||||
Based on: 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), 10-K (reporting date: 2020-01-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit showed an overall upward trend from 2020 to 2025, starting at 1,931 million US dollars and rising to 4,605 million US dollars. There was a significant increase from 2020 to 2022, peaking at 6,144 million US dollars in 2022. Following this peak, the economic profit declined in 2023 to 3,769 million US dollars but recovered somewhat in 2024 before slightly decreasing again in 2025.
- Adjusted Net Sales
- Adjusted net sales increased steadily from 72,135 million US dollars in 2020 to 96,822 million US dollars in 2023, representing growth over these four years. However, sales declined notably in the subsequent two years, falling to 86,206 million in 2024 and further to 83,667 million in 2025. This indicates a reversal of the earlier growth trend starting in 2024.
- Economic Profit Margin
- The economic profit margin mirrored the trend of economic profit, rising from 2.68% in 2020 to a peak of 6.36% in 2022. This was followed by a decline in 2023 to 3.89%, then a recovery in 2024 reaching 6.11%, before a slight decrease to 5.5% in 2025. The margin fluctuations reflect changes in the company's profitability relative to its adjusted net sales over the period.