Medtronic PLC (NYSE:MDT)

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibits a fluctuating trend over the observed periods. Initially, it decreased from 4408 million USD in 2020 to 4049 million USD in 2021. It then rose significantly to 4888 million USD in 2022 before dropping again in the subsequent years to 4151 million USD in 2023 and further to 3736 million USD in 2024. In the latest period, there is a notable recovery, with NOPAT increasing to 4980 million USD. This pattern suggests variability in operational profitability with a partial rebound in the most recent year.

Cost of Capital

The cost of capital remains relatively stable across the timeframe, ranging narrowly between approximately 10.78% and 11.21%. The cost slightly increased from 10.88% in 2020 to a peak of 11.21% in 2021, followed by minor fluctuations around the 11% mark before slightly declining to 10.78% in 2025. This stability indicates consistent capital cost conditions over the period.

Invested Capital

The invested capital shows moderate variation, beginning at 71,146 million USD in 2020 and increasing to 72,405 million USD in 2021. It subsequently declines to 69,629 million USD in 2022 and remains relatively steady with a slight upward movement to 70,365 million USD in 2025. Overall, the capital base has slight contractions and expansions but remains mostly around the low seventy-thousand million USD range, implying a stable investment scale.

Economic Profit

The economic profit is consistently negative throughout the period, indicating that the company’s returns do not surpass its cost of capital. The most negative value is recorded in 2021 at -4065 million USD, followed by a less negative figure in 2022 (-2780 million USD). However, it worsens again to -3690 million USD in 2023 and slightly more to -3760 million USD in 2024, before improving to -2603 million USD in 2025. Despite the persistent negative economic profit, there is an improving trend in the most recent year, suggesting a reduction in value destruction.

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.

Economic Profit

The economic profit shows a fluctuating negative trend over the periods analyzed. It started at -3,333 million US dollars and worsened to -4,065 million in the following year. Subsequently, it improved to -2,780 million but then declined again to -3,690 million and -3,760 million. By the final period, it showed notable improvement, reaching -2,603 million. Overall, while the economic profit remains negative throughout, the last year indicates a recovery trend.

Invested Capital

The invested capital values display minor fluctuations within a relatively narrow range. The values started at approximately 71,146 million US dollars, increased slightly to 72,405 million, and then decreased to 69,629 million. This was followed by slight increases and decreases, ending at 70,365 million in the final period. The trend suggests stable capital investment levels without significant expansion or contraction.

Economic Spread Ratio

The economic spread ratio remains consistently negative during the entire period, indicating returns below the cost of capital. It moved from -4.69% to a low point of -5.61%, improved somewhat to -3.99%, then deteriorated again to -5.23% and -5.48%. In the last period, it showed improvement, reaching -3.7%. This pattern suggests that despite some recovery, the company has continuously experienced insufficient returns relative to its invested capital cost.

Economic Profit

The economic profit figures demonstrate a consistent pattern of negative values throughout the observed periods, indicating that the company has not achieved economic profitability in any year reported. Initially, economic profit declined from -3333 million US dollars in 2020 to a lower point of -4065 million in 2021. Following this, an improvement is noted in 2022, with economic profit rising to -2780 million, signaling reduced economic losses. However, the next two years show a reversal with deeper negative results in 2023 (-3690 million) and 2024 (-3760 million). The most recent period, 2025, again reveals an improvement to -2603 million, representing the least negative figure within the timeframe aside from 2022.

Adjusted Net Sales

Adjusted net sales display a generally upward trend over the six-year horizon. Starting at approximately 28.9 billion US dollars in 2020, this value increased steadily year-over-year with minor fluctuations, reaching about 33.5 billion US dollars by 2025. This reflects a compound growth tendency in sales revenue, suggesting that the company has been able to expand its top-line figures despite fluctuating economic profit results.

Economic Profit Margin

The economic profit margin remains negative throughout the six years, reflecting ongoing challenges in converting sales into economic profit. The margin showed a worsening from -11.53% in 2020 to -13.47% in 2021, indicating decreased efficiency or higher costs relative to sales. Improvement is observed in 2022 when the margin increased to -8.76%, representing the best level in the period. However, subsequent years 2023 and 2024 saw a decline again to around -11.6% to -11.81%, before a notable recovery in 2025 when the margin improved to -7.76%. This pattern underscores volatility in profitability efficiency but hints at better cost control or operational leverage in the latest year.

Overall Insights

Despite continuous negative economic profit and economic profit margins, the company has managed to grow adjusted net sales consistently. The intermittent improvements in economic profit and profit margin suggest periods of better operational performance or cost management, although sustained profitability has not yet been achieved. The latest year’s data points to a possible positive inflection in economic profitability, with both economic profit and margin showing their best figures since 2020. Continued monitoring of these trends would be essential to assess the durability of the recent improvements amid ongoing sales growth.