Nike Inc. (NYSE:NKE)

The analysis of the financial data over the six-year period reveals several notable trends and fluctuations in key performance indicators.

Net Operating Profit After Taxes (NOPAT)

The NOPAT displays considerable variability, with a sharp decline from 4,182 million USD in 2019 to 2,477 million USD in 2020. This is followed by a significant rebound in 2021 to 5,490 million USD, remaining relatively stable in 2022 at 5,557 million USD. However, a downward adjustment occurs in 2023 to 5,013 million USD, with a slight recovery to 5,146 million USD in 2024. Overall, NOPAT demonstrates resilience after a steep initial drop, maintaining higher levels than the starting point in the later years.

Cost of Capital

The cost of capital shows a gradual downward trend, decreasing from 14.49% in 2019 to 13.94% in 2024. This reduction reflects a modest improvement in the company’s capital efficiency or changes in market conditions affecting the required return. The margin of change is slight but consistent, indicating a stable financial environment regarding funding costs.

Invested Capital

Invested capital exhibits an increasing trend from 14,182 million USD in 2019 to 22,129 million USD in 2024, with a peak at 21,137 million USD in 2022. There is a minor decrease in 2023 to 20,394 million USD before it rises again in 2024. This upward trajectory suggests ongoing investment and asset growth, although the dip in 2023 may indicate a period of asset optimization or divestment.

Economic Profit

Economic profit shows high volatility, starting at 2,127 million USD in 2019, dropping sharply into negative territory at -195 million USD in 2020. It then recovers strongly to 2,456 million USD in 2021 and remains fairly stable in 2022 at 2,543 million USD, before decreasing to 2,100 million USD in 2023 and slightly further to 2,061 million USD in 2024. The negative economic profit in 2020 points to a period where returns did not cover the cost of capital, whereas subsequent years demonstrate value creation, albeit with a modest decline towards the end of the period.

In summary, after an initial downturn in 2020, the company’s operational profitability and economic profit returned to strong positive territory. Invested capital steadily increased, indicating expansion or reinvestment activities. The cost of capital declined slightly, supporting improved financial efficiency. However, fluctuations in economic profit and NOPAT highlight ongoing challenges in sustaining peak performance levels consistently.

The financial data reveals several notable trends in profitability over the reported periods.

Net Income

The net income experienced a significant decline from 2019 to 2020, dropping from 4,029 million USD to 2,539 million USD. This reduction aligns with the global economic downturn during this period. However, there was a strong recovery in 2021, with net income more than doubling to 5,727 million USD. The subsequent two years saw fluctuations, with a decrease to 5,070 million USD in 2023, followed by an increase to 5,700 million USD in 2024, indicating a degree of volatility but overall recovery compared to the early years.

Net Operating Profit After Taxes (NOPAT)

The NOPAT data mirrors the net income trend closely, starting at 4,182 million USD in 2019 and declining substantially in 2020 to 2,477 million USD. A pronounced rebound occurred in 2021, rising to 5,490 million USD, followed by a slight increase to 5,557 million USD in 2022. In 2023, there was a dip to 5,013 million USD, but a moderate recovery was observed in 2024, reaching 5,146 million USD. This trajectory suggests the company managed to stabilize and improve its operational efficiency after the initial downturn.

Overall, both net income and NOPAT demonstrate resilience after the sharp decline in 2020. The data indicates recovery and stabilization in the subsequent years, though with some variability. The slight declines noted in 2023 for both metrics suggest external or operational challenges during that period, but the partial recovery in 2024 points to ongoing efforts to sustain profitability.

Income Tax Expense

The income tax expense displayed considerable fluctuations over the observed periods. Initially, it declined from 772 million US dollars in May 2019 to 348 million in May 2020, indicating a significant reduction in tax liability or taxable income during this timeframe. This was followed by a sharp increase in May 2021 to 934 million US dollars. After a moderate decrease to 605 million in May 2022, the expense rose again substantially, reaching 1,131 million US dollars in May 2023 before declining slightly to 1,000 million in May 2024. Overall, the trend reflects volatility with an upward bias particularly in the last three recorded years.

Cash Operating Taxes

Cash operating taxes show a consistent upward trend across the years. Starting from 770 million US dollars in May 2019, there was a moderate increase to 764 million in May 2020, which was followed by a significant surge to 1,390 million in May 2021. This upward momentum continued, albeit at a slower pace, rising to 1,313 million in May 2022 and 1,264 million in May 2023. The latest data point from May 2024 indicates a further increase to 1,482 million US dollars. The steady growth indicates rising cash tax payments associated with operations, possibly reflecting improved profitability or changes in tax payment timings.

Comparative Insights

While both income tax expense and cash operating taxes exhibit notable changes, cash operating taxes follow a more consistent and upward pattern. Income tax expense is more volatile, with periods of both sharp decreases and increases, which may reflect accounting adjustments, tax planning strategies, or variable taxable income. The divergence between the relatively smoother increase in cash operating taxes and the fluctuating income tax expense suggests a timing or recognition difference between tax expenses recognized in accounting records and actual tax payments.

The financial data presents several key trends regarding the company's debt, equity, and invested capital over a six-year period from May 2019 to May 2024.

Total Reported Debt & Leases

The total reported debt and leases show a significant increase from 2019 to 2020, nearly doubling from approximately $6.7 billion to $13 billion. After this sharp rise, the debt level slightly decreased but remained relatively stable in the following years, gradually declining to about $11.95 billion by May 2024. This pattern suggests an initial period of increased leverage followed by a gradual deleveraging or stabilization phase.

Shareholders’ Equity

Shareholders' equity experienced a declining trend from May 2019 through May 2020, decreasing from $9 billion to $8 billion. Subsequently, there was a marked recovery starting in 2021, with equity rising significantly to nearly $12.8 billion. This upward trajectory continued through 2022, reaching a peak of approximately $15.3 billion, before slightly declining to $14 billion in 2023 and then marginally increasing again to $14.4 billion by 2024. The overall pattern indicates a strong equity growth phase following an initial downturn, reflecting improved retained earnings or capital injections.

Invested Capital

Invested capital saw a substantial increase between 2019 and 2020, growing from roughly $14.2 billion to over $19 billion. The upward trend persisted, albeit with slower growth, reaching just above $21 billion in 2021 and stabilizing near this level through 2022. A slight dip occurred in 2023, followed by a recovery to approximately $22.1 billion in 2024. This suggests continued investment in the company's assets or operations, tempered by some variation in the most recent period.

In summary, the data reflects a period of heightened financial activity around 2020, with increased leverage and invested capital. Subsequent years show signs of financial stabilization and growth in shareholders' equity, indicating a strengthening of the company's financial position. The gradual reduction of debt alongside rising equity and stable invested capital suggests improved balance sheet management and potentially enhanced financial resilience.

The financial data reveals significant fluctuations in economic profit over the six-year period. After a strong economic profit of 2,127 million US dollars in 2019, there was a notable decline to a negative 195 million US dollars in 2020, indicating a period of economic loss. Subsequently, economic profit rebounded sharply to 2,456 million in 2021 and maintained elevated levels in the following years, with slight decreases in 2023 and 2024 to 2,100 and 2,061 million US dollars, respectively. This pattern suggests resilience and recovery after an adverse year, although recent slight declines may warrant monitoring.

Invested capital consistently increased over the six-year span, rising from 14,182 million US dollars in 2019 to 22,129 million US dollars in 2024. The upward trend in invested capital indicates ongoing asset accumulation or reinvestment, with a notable jump between 2019 and 2020 and more moderate growth afterward. This continual expansion of the capital base underscores the company's efforts to support growth or operational scale.

The economic spread ratio, which measures the return on invested capital relative to the cost of capital, mirrors the volatility observed in economic profit. Starting at a high 14.99% in 2019, it turned negative at -1.02% in 2020, aligning with the economic loss recorded. The ratio then recovered to double-digit performance in subsequent years—11.68% in 2021, 12.03% in 2022—but has been trending downward more recently to 10.3% in 2023 and further to 9.31% in 2024. While still positive, this declining spread ratio may indicate diminishing efficiency in generating returns over the cost of capital.

Overall, the data illustrates a period of economic challenge in 2020, followed by a robust recovery in profit generation and continued capital investment. However, the recent downward trend in both economic profit and economic spread ratio suggests that the company may face increasing pressure on profitability and return efficiency, despite a larger capital base. Continuous attention to operational effectiveness and capital utilization is advisable given these developments.

Revenues

The revenue showed an overall increasing trend from 2019 to 2024. Starting at $39,117 million in 2019, revenues experienced a decline in 2020 to $37,403 million, likely reflective of external economic pressures during that period. Subsequently, there was a consistent upward trajectory, reaching $51,362 million by 2024. This growth suggests a recovery and expansion beyond pre-2020 levels.

Economic Profit

The economic profit figures display notable volatility across the years. In 2019, economic profit was $2,127 million, which then dropped to a negative value of -$195 million in 2020, indicating a loss in economic value creation during that year. This negative figure contrasts sharply with the other years. From 2021 onwards, economic profit rebounded significantly, peaking at $2,543 million in 2022 before slightly declining to $2,061 million in 2024. Despite the fluctuations, economic profit remained strongly positive after 2020 except for the dip in the final two years.

Economic Profit Margin

The economic profit margin mirrored the trends in economic profit. Starting at 5.44% in 2019, it turned negative to -0.52% in 2020, consistent with the economic profit loss. In the following years, the margin recovered and stabilized around 5.4% in 2021 and 2022, before experiencing a gradual decrease to 4.01% by 2024. Although the margin reduced somewhat in later years, it remained in positive territory, reflecting the company's ability to generate economic value relative to revenues despite some declines.