Medtronic PLC (NYSE:MDT)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes demonstrated variability over the observed periods. Starting at 4,408 million US dollars in April 2020, it experienced a decline to 4,049 million in 2021. Subsequently, it rose sharply to 4,888 million in 2022, followed by decreases in the next two years reaching 3,736 million in 2024. In 2025, NOPAT recovered noticeably to 4,980 million, the highest in the data series.

Cost of Capital

The cost of capital remained relatively stable with minor fluctuations, starting at 10.78% in 2020 and peaking slightly at 11.1% in 2021. Afterward, it declined steadily to 10.68% by 2025, indicating a slight reduction in the weighted average cost associated with the company’s capital structure.

Invested Capital

Invested capital showed limited variation throughout the timeline. It increased marginally from 71,146 million US dollars in 2020 to a peak of 72,405 million in 2021. The subsequent years saw decreases and modest recoveries, with values ranging between approximately 68,670 million and 70,505 million, ending at 70,365 million in 2025, close to the initial level.

Economic Profit

The economic profit consistently remained negative across all years, reflecting that the company's returns did not exceed its cost of capital during the period. The deficit was largest in 2021 at -3,988 million US dollars and showed some improvement by 2025 when the negative value decreased to -2,532 million. This trend suggests that although economic profit was negative, the shortfall relative to cost of capital narrowed slightly toward the end of the period.

Overall Insights

The financial metrics illustrate a company facing challenges in maintaining consistent profitability relative to its invested capital and cost of capital. Despite fluctuations in operating profit and a slight decline in cost of capital over time, invested capital remained relatively flat. The persistently negative economic profit indicates that returns generated have not been sufficient to cover the cost of capital, though there is a marginal positive movement in reducing this gap in the last year analyzed.

Net Income Attributable to Medtronic

The net income figures demonstrated variability over the reported periods. Starting at 4,789 million US dollars in April 2020, the net income decreased significantly to 3,606 million by April 2021. It rebounded to 5,039 million in April 2022, indicating a strong recovery. However, a subsequent decline occurred, with net income falling to 3,758 million in April 2023 and slightly decreasing again to 3,676 million in April 2024. The latest period, April 2025, shows an improvement to 4,662 million, suggesting a positive turnaround in profitability.

Net Operating Profit After Taxes (NOPAT)

NOPAT followed a somewhat similar pattern to net income, but with slightly less fluctuation. It decreased from 4,408 million in April 2020 to 4,049 million in April 2021. Then, it increased again to 4,888 million by April 2022. Thereafter, it declined to 4,151 million in April 2023 and further down to 3,736 million in April 2024. The most recent figure in April 2025 reached 4,980 million, representing the highest value among the periods analyzed and indicating improved operational profitability.

Overall Trend Analysis

Both net income and NOPAT exhibited cyclical patterns with notable decreases in 2021 and 2023-2024, followed by recoveries in 2022 and 2025. The volatility suggests the company faced varying operational and market challenges throughout the periods. The recent rise in both metrics in 2025 points towards an enhanced financial performance and operational efficiency. Furthermore, the highest NOPAT value in the final period underscores an improvement in profitability after taxes on operating income, which is a positive indicator for core business performance.

The financial data reveals notable trends in the tax-related expenses over the observed period.

Income Tax Provision (Benefit)

The income tax provision shows significant fluctuations from 2020 to 2025. Initially, in 2020, there was a tax benefit of -$751 million, indicating a negative tax provision. However, from 2021 onwards, there is a reversal to positive tax provisions, increasing from $265 million in 2021 to a peak of $1,580 million in 2023. Thereafter, the provision decreases to $1,133 million in 2024 and further to $936 million in 2025. This pattern suggests an initial tax advantage followed by growing tax liabilities that begin to moderate in the final years of the period.

Cash Operating Taxes

Cash operating taxes demonstrate a consistent upward trend throughout the period from 2020 to 2023, increasing from $761 million to $1,979 million. In 2024, there is a slight decline to $1,820 million, followed by a further decrease to $1,436 million in 2025. This rise and subsequent decline in cash taxes could reflect operational performance fluctuations or changes in tax strategies and cash management.

Overall, the data indicates evolving tax expenses with an initial tax benefit turning into substantial tax provisions and an increasing trend in cash operating taxes until 2023, followed by a moderate decline in the last two reporting periods.

The financial data shows several notable trends over the six-year period under review.

Total reported debt & leases

The total reported debt and leases have generally increased, growing from 25,742 million US dollars in April 2020 to 29,626 million US dollars in April 2025. Despite some fluctuations, such as a decrease in 2022, the overall trend is upward, indicating a gradual rise in leverage or financing through debt and leases.

Shareholders’ equity

Shareholders’ equity experienced a slight increase from 50,737 million US dollars in April 2020 to a peak of 52,551 million US dollars in April 2022. However, from that peak, equity declined steadily to 48,024 million US dollars by April 2025. This downward trajectory in equity may reflect distributions to shareholders, asset impairments, or other factors reducing net asset value.

Invested capital

Invested capital saw a modest increase from 71,146 million US dollars in April 2020 to a peak near 72,405 million US dollars in April 2021. Subsequently, it declined to a low of 68,670 million US dollars in April 2024 before rising again to 70,365 million US dollars in April 2025. This pattern suggests some variability in the company's capital investment or asset base, with a general trend of moderate fluctuation rather than sustained growth or contraction.

The financial data presents key indicators over a six-year period, reflecting the company's economic performance and capital deployment.

Economic Profit

Economic profit remains negative throughout the entire period, indicating the company has consistently failed to generate returns above its cost of capital. The losses fluctuate yearly, with the highest negative value recorded in 2021 at -3,988 million US dollars. Thereafter, a reduction in economic losses is noted in 2022 (-2,707 million), followed by a resurgence of losses in 2023 and 2024, before substantially decreasing again in 2025 (-2,532 million). This pattern suggests volatility in profitability but a general trend towards improvement in the most recent year.

Invested Capital

The invested capital shows moderate fluctuations but remains relatively stable overall. The highest invested capital was reported in 2021 at 72,405 million US dollars. There is a slight decline observed in 2022 and 2024, reaching the lowest point in 2024 at 68,670 million US dollars. However, capital investment increased again in 2025 to 70,365 million US dollars. This indicates ongoing capital commitments by the company with some adjustments possibly reflecting operational or strategic changes.

Economic Spread Ratio

The economic spread ratio is consistently negative, confirming that the company’s returns are below its capital cost. It reached its lowest point in 2021 (-5.51%), followed by improvement in 2022 (-3.89%), then deteriorated in the next two years before improving significantly in 2025 to -3.6%. This suggests that although the company has not achieved positive spreads, it has made some headway towards reducing the gap between returns and capital costs, particularly in the latest year.

Overall, the data depicts a company struggling to generate economic profit with persistent negative economic spreads. Despite these challenges, the trend towards reduced losses and improved spread ratios in the most recent year indicates potential progress in managing investments and enhancing operational performance.

The analysis of the annual financial data reveals several notable trends relating to economic profit, adjusted net sales, and economic profit margin over the given periods.

Economic Profit

Economic profit has consistently been negative throughout the periods, indicating that the company did not generate a surplus over its cost of capital during these years. The figures show a decline from -3,261 million US dollars in April 2020 to a low point of -3,988 million US dollars in April 2021. Following this decline, there is a partially recovered trend with values fluctuating downward again reaching -3,691 million US dollars in April 2024. The figure for April 2025 shows a significant improvement to -2,532 million US dollars, representing the least negative value in the series.

Adjusted Net Sales

Adjusted net sales demonstrate a generally positive upward trend, starting from 28,901 million US dollars in April 2020 and increasing annually to reach 33,530 million US dollars by April 2025. This steady growth suggests an expansion in revenue-generating activities or successful sales strategies over the period.

Economic Profit Margin

The economic profit margin, expressed as a percentage, also remains negative across all reported years. It closely mirrors the trend in economic profit, starting at -11.28% in April 2020, worsening to -13.21% by April 2021, and then improving gradually although remaining negative. The margin improves notably in the last period reported, rising to -7.55% in April 2025, indicating a reduction in economic losses relative to net sales.

Overall, the company exhibits consistent growth in adjusted net sales but continues to operate at an economic loss as indicated by negative economic profit and profit margins. However, there is a discernible positive shift in the economic profit and margin towards the end of the period, suggesting potential operational improvements or cost management efforts beginning to take effect.