Medtronic PLC (NYSE:MDT)

Net Operating Profit After Taxes (NOPAT)

The NOPAT figures indicate fluctuations over the observed periods. Starting at 4,408 million USD in April 2020, there was a decline to 4,049 million USD in April 2021. This was followed by a notable increase to 4,888 million USD in April 2022. Subsequently, NOPAT decreased again in the next two years, reaching 3,736 million USD in April 2024, before rising sharply to 4,980 million USD in April 2025. The trend suggests periods of variability with occasional recoveries.

Cost of Capital

The cost of capital exhibited relative stability, remaining within a narrow band around 11%. The values slightly increased from 10.87% in April 2020 to a peak of 11.2% in April 2021, then gradually decreased over the following years to 10.77% by April 2025. This indicates a modest decline in the capital cost over time.

Invested Capital

Invested capital showed variability but generally maintained a level around 70,000 million USD. It rose modestly from 71,146 million USD in April 2020 to 72,405 million USD in April 2021, followed by a decrease to 69,629 million USD in April 2022. Minor fluctuations continued, reaching 68,670 million USD in April 2024 and slightly increasing to 70,365 million USD in April 2025. Overall, the invested capital remained relatively stable without drastic changes.

Economic Profit

Economic profit remained negative throughout all periods, indicating that the returns generated were below the cost of capital. The negative values ranged from -3,327 million USD in April 2020 to a low of -4,059 million USD in April 2021. After improving to -2,774 million USD in April 2022, economic profit worsened again to around -3,755 million USD by April 2024 before improving significantly to -2,597 million USD in April 2025. Despite some recovery, the company consistently experienced economic losses over the review period.

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 analysis of the provided financial data reveals several notable trends related to economic profit, invested capital, and the economic spread ratio over the six-year period ending in 2025.

Economic Profit

Economic profit remains negative throughout the period, indicating that the company has been consistently generating returns below its cost of capital. There is considerable fluctuation in the economic profit figures, with the lowest point occurring in 2021 at -4,059 million US dollars and the highest in 2025 at -2,597 million US dollars. This trend suggests some improvement in economic profit by the end of the observed period, although it continues to be a loss.

Invested Capital

Invested capital shows moderate variation but remains relatively stable overall. Starting at 71,146 million US dollars in 2020, it slightly increased to 72,405 million in 2021 before decreasing to 69,629 million in 2022. Subsequently, it fluctuates mildly, ending near the initial levels at 70,365 million US dollars in 2025. This stability in invested capital indicates a consistent scale of investment with minor adjustments during the period.

Economic Spread Ratio

The economic spread ratio, which measures the difference between return on invested capital and the cost of capital as a percentage, is negative throughout the period. It mirrors the pattern of economic profit, starting at -4.68% in 2020, peaking negatively at -5.61% in 2021, and then improving to -3.69% by 2025. This gradual improvement suggests a reduction in the value destruction caused by returns falling below the cost of capital, albeit the ratio remains negative, highlighting ongoing challenges in generating adequate returns.

In summary, the company's financial performance indicates ongoing difficulties in generating positive economic profit and a negative economic spread ratio over the years. While there are signs of partial recovery in the latter years, these metrics suggest the need for strategic adjustments to enhance value creation. The invested capital base has remained relatively consistent, supporting operations without significant expansion or contraction during the period.

The financial data reveals several key trends over the reported periods.

Adjusted net sales

There is a consistent upward trend in adjusted net sales, increasing from 28,901 million US dollars in April 2020 to 33,530 million US dollars projected in April 2025. This indicates steady revenue growth over the five-year span, with only minor fluctuations in annual increments.

Economic profit

Economic profit remains negative throughout the reported periods, reflecting ongoing economic losses each year. The loss peaked at -4,059 million US dollars in April 2021 but then showed some improvement by decreasing the magnitude of losses to -2,597 million US dollars forecasted in April 2025. Despite the losses, the trend suggests a gradual reduction in negative economic profit over the years.

Economic profit margin

The economic profit margin closely follows the trend in economic profit, remaining negative across all years. It worsened from -11.51% in April 2020 to -13.45% in April 2021, then improved consistently to a projection of -7.75% by April 2025. This improvement indicates a possible enhancement in operational efficiency or cost management, although the margin remains in the negative territory, highlighting that the company is not generating economic value above its cost of capital up to the latest period.

Overall, the data suggests the company is growing its sales steadily but continues to face challenges in generating positive economic profit. However, there is a clear improvement trend in reducing losses and narrowing negative margins, which could be indicative of strategic adjustments or improved cost control measures over the analyzed period.