Lowe’s Cos. Inc. (NYSE:LOW)

The period demonstrates fluctuating financial performance as measured by economic profit. Net operating profit after taxes (NOPAT) initially increased significantly, followed by a decline and subsequent recovery. The cost of capital exhibited an upward trend initially, then stabilized and decreased slightly. Invested capital showed some volatility, while economic profit generally followed the trend of NOPAT, peaking in 2022 before decreasing in subsequent years.

Net Operating Profit After Taxes (NOPAT)

NOPAT increased from US$5,097 million in 2020 to US$7,056 million in 2021, representing a substantial gain. This was followed by a significant increase to US$9,827 million in 2022. However, NOPAT decreased to US$7,020 million in 2023 before recovering to US$8,789 million in 2024 and settling at US$8,137 million in 2025. This suggests a period of strong growth followed by a correction and partial recovery.

Cost of Capital

The cost of capital rose from 13.70% in 2020 to 16.12% in 2021 and further to 16.32% in 2022. It then decreased to 15.28% in 2023 and 15.82% in 2024, before decreasing slightly again to 15.62% in 2025. This indicates increasing financing costs initially, followed by a stabilization and slight reduction.

Invested Capital

Invested capital increased from US$26,717 million in 2020 to US$28,534 million in 2021. A decrease was observed in 2022 to US$26,296 million, followed by a further decrease to US$24,710 million in 2023. Invested capital then increased to US$25,913 million in 2024 and US$26,276 million in 2025. This suggests a period of capital expansion followed by a reduction and subsequent stabilization.

Economic Profit

Economic profit increased from US$1,437 million in 2020 to US$2,457 million in 2021, and then experienced a significant increase to US$5,535 million in 2022. A decline was observed in 2023 to US$3,243 million, followed by a recovery to US$4,691 million in 2024 and a slight decrease to US$4,032 million in 2025. The trend in economic profit closely mirrors the fluctuations in NOPAT, indicating that profitability relative to the cost of capital is a key driver of overall economic performance.

Overall, the period reveals a dynamic financial situation. While economic profit remains positive throughout the observed timeframe, the fluctuations suggest sensitivity to changes in NOPAT, cost of capital, and invested capital. The peak economic profit in 2022 was not sustained, indicating potential challenges in maintaining high levels of profitability relative to capital employed.

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.

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.

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.

The economic spread ratio demonstrates a generally increasing trend over the observed period, albeit with some fluctuation. Initial values indicate a relatively modest spread, which expands significantly before stabilizing at a higher level. Economic profit exhibits volatility, while invested capital shows a more subdued pattern of change.

Economic Spread Ratio

The economic spread ratio increased from 5.38% in January 2020 to a peak of 21.05% in January 2022. This substantial increase suggests a growing ability to generate returns exceeding the cost of capital. Following the peak, the ratio decreased to 13.13% in February 2023, but then recovered to 18.10% in February 2024. The most recent value, 15.34% as of January 2025, represents a slight decrease from the prior year, but remains considerably higher than the initial value in 2020. This indicates continued, though potentially moderating, superior performance relative to the cost of capital.

Economic Profit

Economic profit increased significantly from US$1,437 million in January 2020 to US$2,457 million in January 2021. A further substantial increase was observed in January 2022, reaching US$5,535 million. However, economic profit then declined to US$3,243 million in February 2023, before recovering to US$4,691 million in February 2024. The latest reported value for January 2025 is US$4,032 million, representing a decrease from the previous year. The fluctuations in economic profit suggest sensitivity to underlying business conditions or strategic decisions.

Invested Capital

Invested capital increased from US$26,717 million in January 2020 to US$28,534 million in January 2021. A subsequent decrease to US$26,296 million was observed in January 2022. Further declines followed, reaching US$24,710 million in February 2023. Invested capital then increased to US$25,913 million in February 2024 and continued to US$26,276 million in January 2025. The changes in invested capital are relatively modest compared to the fluctuations in economic profit, suggesting that shifts in profitability are the primary driver of changes in the economic spread ratio.

The observed trends suggest a period of improving financial performance, followed by some normalization. While economic profit has experienced fluctuations, the economic spread ratio has generally remained elevated, indicating a sustained competitive advantage in generating returns on invested capital.

The economic profit margin exhibited a generally increasing trend from 2020 to 2024, followed by a slight decrease in the most recent period. Economic profit itself demonstrated substantial volatility over the observed timeframe, while adjusted net sales showed initial growth followed by a contraction.

Economic Profit Margin

The economic profit margin began at 1.99% in 2020 and increased to 2.73% in 2021. A significant jump was observed in 2022, reaching 5.73%. The margin then decreased to 3.35% in 2023 before recovering to 5.44% in 2024. The latest period, 2025, shows a slight decline to 4.82%. This suggests improving profitability relative to sales between 2020 and 2024, with a minor pullback in the most recent year.

Economic Profit

Economic profit increased from US$1,437 million in 2020 to US$2,457 million in 2021, representing substantial growth. The largest increase occurred between 2021 and 2022, with economic profit reaching US$5,535 million. A decrease to US$3,243 million was noted in 2023. Subsequent increases were observed in 2024 (US$4,691 million) and 2025 (US$4,032 million), though the 2025 value remains below the 2024 level.

Adjusted Net Sales

Adjusted net sales increased from US$72,135 million in 2020 to US$90,111 million in 2021, and continued to grow to US$96,664 million in 2022. Sales remained relatively stable in 2023 at US$96,822 million. However, a decline was observed in 2024 (US$86,206 million) and continued into 2025 (US$83,667 million). This indicates a shift in sales performance after 2022.

The interplay between economic profit and adjusted net sales suggests that while profitability improved significantly in 2022, the recent decline in sales may be impacting overall economic profit, despite a relatively stable economic profit margin in the latest period. The decrease in economic profit from 2022 to 2023, coupled with the subsequent sales decline, warrants further investigation.