Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Sysco Corp., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,500 – 14.73% × 16,003 = 144
The financial performance over the analyzed period reflects a transition from significant value destruction to a state of positive economic value creation. After a period of severe contraction and capital inefficiency, there is a clear trajectory of recovery characterized by increasing operational profitability and a return to positive economic profit.
- Net Operating Profit After Taxes (NOPAT)
- A substantial decline in NOPAT occurred between June 2019 and June 2020, falling from 1,850 million to 665 million. Following this trough, a consistent and strong upward trend is observed, with profits rising steadily each year to reach a peak of 2,500 million by June 2024. This represents a significant expansion in operational earning power compared to the baseline 2019 levels.
- Cost of Capital
- The cost of capital remained relatively stable throughout the period, fluctuating within a narrow range between 12.78% and 15.33%. While there was a slight dip in 2020 and a peak in 2022, the rate has converged toward 14.73% by 2024, indicating a consistent hurdle rate for investment returns.
- Invested Capital
- Invested capital experienced a sharp increase in 2020, rising to 18,092 million, followed by a period of contraction and stabilization between 14,109 million and 14,339 million from 2021 to 2023. A recent increase to 16,003 million in 2024 suggests a renewed phase of capital investment or expansion.
- Economic Profit
- The economic profit demonstrates a volatile but improving trend. The company experienced deep negative economic profit from 2019 to 2022, reaching a nadir of -1,648 million in 2020, which indicates that NOPAT was insufficient to cover the cost of capital. However, a reversal occurred in 2023, when economic profit turned positive at 35 million, and further improved to 144 million in 2024. This shift confirms that the entity is now generating returns in excess of its cost of capital.
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Net Operating Profit after Taxes (NOPAT)
Sysco Corp., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for credit losses.
3 Addition of increase (decrease) in equity equivalents to net earnings.
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 963 × 4.19% = 40
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 647 × 21.00% = 136
6 Addition of after taxes interest expense to net earnings.
The financial data reveals significant fluctuations in the profitability metrics over the examined periods. Net earnings decreased sharply from 1674 million USD in June 2019 to 215 million USD in June 2020, reflecting a substantial decline likely influenced by external challenges. This was followed by a partial recovery to 524 million USD in July 2021 and a more pronounced increase to 1359 million USD in July 2022. The upward trend continued with net earnings reaching 1770 million USD in July 2023 and further rising to 1955 million USD by June 2024, indicating a steady restoration and growth in earnings performance.
Similarly, Net Operating Profit After Taxes (NOPAT) demonstrated a comparable trajectory. It declined from 1850 million USD in June 2019 to 665 million USD in June 2020, evidencing a significant contraction in operating profitability. Subsequently, NOPAT showed a moderate increase to 861 million USD in July 2021, followed by a substantial recovery and growth to 1757 million USD in July 2022. This positive momentum persisted with NOPAT rising to 2164 million USD in July 2023 and reaching 2500 million USD by June 2024.
Overall, the data indicates that while profitability metrics experienced a notable downturn around mid-2020, the company has since achieved a strong and consistent rebound in operating and net earnings. The improvement in NOPAT outpaces the growth in net earnings, suggesting enhanced operational efficiency or favorable tax impacts in the more recent periods. The upward trajectory in both measures over the last few reported years points to robust financial recovery and strengthening profitability.
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Cash Operating Taxes
Sysco Corp., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
The analysis of the annual financial data reveals significant fluctuations and trends in both the income tax provision and cash operating taxes over the six-year period.
- Income Tax Provision
- The income tax provision exhibits a notable decline from 332 million USD in 2019 to 78 million USD in 2020, followed by a further decrease to 61 million USD in 2021. However, there is a marked reversal in this trend starting in 2022, with the provision rising sharply to 388 million USD, and continuing to increase in subsequent years, reaching 515 million USD in 2023 and 610 million USD in 2024. This pattern suggests an initial reduction in tax obligations or tax-related benefits during the 2020 and 2021 periods, potentially related to external economic factors or tax law changes, followed by a substantial increase in tax liability or accrual in more recent years.
- Cash Operating Taxes
- Cash operating taxes show a different trajectory. Beginning at 538 million USD in 2019, these amounts decline to 358 million USD in 2020, indicating a reduction in actual tax payments. However, starting in 2021, cash operating taxes increase to 408 million USD, continuing an upward trend to 588 million USD in 2022, 648 million USD in 2023, and reaching 720 million USD in 2024. This consistent rise from 2021 onwards points to increasing cash tax outflows, which may be linked to higher taxable income, changes in tax regulations, or improved cash management strategies aimed at timely tax payments.
Overall, the data suggest a period of reduced income tax provision and cash tax payments during the early years, particularly around 2020 and 2021, possibly reflecting the impact of economic disruptions or tax relief measures during this time. From 2022 onward, both the income tax provision and cash operating taxes have increased significantly, which may indicate recovery and higher profitability, as well as evolving tax obligations. The divergence and subsequent convergence of these two metrics highlight important dynamics in tax accounting and cash flow management over the analyzed period.
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Invested Capital
Sysco Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of equity equivalents to shareholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of marketable securities.
The financial data indicates notable fluctuations and trends in the company's capital structure and financial position over the six-year period.
- Total Reported Debt & Leases
- The company experienced a significant increase in total reported debt and leases from US$8,704 million in 2019 to a peak of US$15,078 million in 2020. This was followed by a declining trend over the next three years, dropping to US$11,166 million by 2023. However, in 2024, debt levels rose again to US$12,945 million. The initial sharp rise may reflect increased borrowing or lease commitments possibly linked to strategic investments or market conditions, while the subsequent decline suggests deleveraging efforts or repayment activities. The rise in 2024 indicates renewed leverage or financing needs.
- Shareholders’ Equity
- Shareholders' equity displayed considerable volatility during the period. It drastically decreased from US$2,503 million in 2019 to a low of US$1,159 million in 2020. This was followed by a recovery phase with equity rising to US$2,009 million in 2023, before slightly declining to US$1,860 million in 2024. The sharp drop in 2020 could be indicative of losses incurred, dividend distributions exceeding earnings, or other equity-reducing events. The subsequent recovery implies profitability improvements or capital injections, but the decrease in 2024 suggests some reduction in equity possibly due to changes in retained earnings or other comprehensive income.
- Invested Capital
- Invested capital saw a marked increase from US$12,842 million in 2019 to a high of US$18,092 million in 2020. After this peak, it decreased to around US$14,100-14,300 million in the following three years before increasing again to US$16,003 million in 2024. This pattern mirrors the debt trends, suggesting that invested capital is largely influenced by changes in financing levels, particularly debt components. The peak in 2020 likely reflects significant capital deployment or acquisition activity, while the partial decline afterward suggests consolidation or divestiture activities. The increase in 2024 points to renewed investment or asset growth.
Overall, the data suggest a period of heightened leverage and capital investment around 2020, followed by a phase of stabilization and partial deleveraging. Equity experienced notable volatility, reflecting changes in company profitability and capital management practices. The recent uptick in debt and invested capital in 2024 may indicate strategic initiatives or market responses requiring increased financing.
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Cost of Capital
Sysco Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 37,685) | 37,685) | ÷ | 50,048) | = | 0.75 | 0.75 | × | 18.37% | = | 13.83% | ||
| Debt3 | 11,400) | 11,400) | ÷ | 50,048) | = | 0.23 | 0.23 | × | 4.62% × (1 – 21.00%) | = | 0.83% | ||
| Operating lease liability4 | 963) | 963) | ÷ | 50,048) | = | 0.02 | 0.02 | × | 4.19% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 50,048) | 1.00 | 14.73% | ||||||||||
Based on: 10-K (reporting date: 2024-06-29).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 35,224) | 35,224) | ÷ | 45,779) | = | 0.77 | 0.77 | × | 18.37% | = | 14.13% | ||
| Debt3 | 9,800) | 9,800) | ÷ | 45,779) | = | 0.21 | 0.21 | × | 4.44% × (1 – 21.00%) | = | 0.75% | ||
| Operating lease liability4 | 755) | 755) | ÷ | 45,779) | = | 0.02 | 0.02 | × | 3.31% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 45,779) | 1.00 | 14.93% | ||||||||||
Based on: 10-K (reporting date: 2023-07-01).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 42,326) | 42,326) | ÷ | 53,568) | = | 0.79 | 0.79 | × | 18.37% | = | 14.51% | ||
| Debt3 | 10,500) | 10,500) | ÷ | 53,568) | = | 0.20 | 0.20 | × | 4.26% × (1 – 21.00%) | = | 0.66% | ||
| Operating lease liability4 | 742) | 742) | ÷ | 53,568) | = | 0.01 | 0.01 | × | 2.85% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 53,568) | 1.00 | 15.20% | ||||||||||
Based on: 10-K (reporting date: 2022-07-02).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 40,449) | 40,449) | ÷ | 54,486) | = | 0.74 | 0.74 | × | 18.37% | = | 13.64% | ||
| Debt3 | 13,300) | 13,300) | ÷ | 54,486) | = | 0.24 | 0.24 | × | 4.40% × (1 – 21.00%) | = | 0.85% | ||
| Operating lease liability4 | 737) | 737) | ÷ | 54,486) | = | 0.01 | 0.01 | × | 2.84% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 54,486) | 1.00 | 14.52% | ||||||||||
Based on: 10-K (reporting date: 2021-07-03).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 29,241) | 29,241) | ÷ | 46,171) | = | 0.63 | 0.63 | × | 18.37% | = | 11.63% | ||
| Debt3 | 16,300) | 16,300) | ÷ | 46,171) | = | 0.35 | 0.35 | × | 4.03% × (1 – 21.00%) | = | 1.12% | ||
| Operating lease liability4 | 631) | 631) | ÷ | 46,171) | = | 0.01 | 0.01 | × | 2.37% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 46,171) | 1.00 | 12.78% | ||||||||||
Based on: 10-K (reporting date: 2020-06-27).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 37,642) | 37,642) | ÷ | 46,782) | = | 0.80 | 0.80 | × | 18.37% | = | 14.78% | ||
| Debt3 | 8,600) | 8,600) | ÷ | 46,782) | = | 0.18 | 0.18 | × | 3.58% × (1 – 21.00%) | = | 0.52% | ||
| Operating lease liability4 | 541) | 541) | ÷ | 46,782) | = | 0.01 | 0.01 | × | 3.58% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 46,782) | 1.00 | 15.33% | ||||||||||
Based on: 10-K (reporting date: 2019-06-29).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Sysco Corp., economic spread ratio calculation, comparison to benchmarks
| Jun 29, 2024 | Jul 1, 2023 | Jul 2, 2022 | Jul 3, 2021 | Jun 27, 2020 | Jun 29, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 144) | 35) | (389) | (1,220) | (1,648) | (119) | |
| Invested capital2 | 16,003) | 14,268) | 14,109) | 14,339) | 18,092) | 12,842) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 0.90% | 0.24% | -2.75% | -8.51% | -9.11% | -0.93% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Costco Wholesale Corp. | 6.62% | 1.81% | 5.90% | 4.30% | 0.53% | — | |
| Target Corp. | -2.04% | -3.81% | 8.87% | -0.61% | — | — | |
| Walmart Inc. | 1.21% | -1.21% | -0.67% | 0.79% | — | — | |
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 144 ÷ 16,003 = 0.90%
4 Click competitor name to see calculations.
The analysis of economic value generation reveals a significant recovery cycle occurring between 2019 and 2024. The period is characterized by a sharp decline in economic performance that bottomed in 2020, followed by a consistent upward trajectory transitioning from value destruction to value creation.
- Economic Profit
- A substantial deterioration in economic profit occurred in 2020, reaching a low of -1,648 million US dollars. This was followed by a steady multi-year recovery. The company shifted into positive territory by 2023 with an economic profit of 35 million US dollars, which further expanded to 144 million US dollars by 2024, indicating that the business is now generating returns in excess of its cost of capital.
- Invested Capital
- Invested capital exhibited notable volatility, peaking at 18,092 million US dollars in 2020 before contracting and stabilizing between 14,109 million and 14,339 million US dollars from 2021 through 2023. A recent increase to 16,003 million US dollars in 2024 suggests a strategic expansion of the capital base occurring simultaneously with the improvement in economic profitability.
- Economic Spread Ratio
- The economic spread ratio underscores the recovery in capital efficiency. The ratio declined sharply to -9.11% in 2020, representing a period of significant value destruction. This metric improved progressively over the following four years, crossing the break-even threshold in 2023 at 0.24% and reaching 0.90% in 2024. This trend confirms that the returns on invested capital have successfully surpassed the company's weighted average cost of capital.
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Economic Profit Margin
Sysco Corp., economic profit margin calculation, comparison to benchmarks
| Jun 29, 2024 | Jul 1, 2023 | Jul 2, 2022 | Jul 3, 2021 | Jun 27, 2020 | Jun 29, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 144) | 35) | (389) | (1,220) | (1,648) | (119) | |
| Sales | 78,844) | 76,325) | 68,636) | 51,298) | 52,893) | 60,114) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 0.18% | 0.05% | -0.57% | -2.38% | -3.11% | -0.20% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Costco Wholesale Corp. | 0.88% | 0.27% | 0.84% | 0.64% | 0.09% | — | |
| Target Corp. | -0.65% | -1.06% | 2.52% | -0.20% | — | — | |
| Walmart Inc. | 0.29% | -0.30% | -0.18% | 0.23% | — | — | |
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Sales
= 100 × 144 ÷ 78,844 = 0.18%
3 Click competitor name to see calculations.
The financial trajectory from June 2019 to June 2024 is characterized by a period of significant value destruction followed by a consistent recovery toward positive economic value creation.
- Economic Profit Trends
- A sharp contraction in economic profit occurred between 2019 and 2020, with values falling from -119 million USD to a trough of -1,648 million USD. A steady upward trajectory followed this decline, with figures improving to -1,220 million USD in 2021 and -389 million USD in 2022. The transition to positive economic profit was achieved in 2023 at 35 million USD, further increasing to 144 million USD by June 2024.
- Sales Performance
- Revenue experienced a decline during the 2020 and 2021 periods, reaching a low of 51,298 million USD in 2021. This was followed by a robust recovery phase, with sales increasing to 68,636 million USD in 2022 and continuing an upward trend to reach 78,844 million USD by June 2024.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the volatility of absolute economic profit, plummeting to -3.11% in 2020. A gradual compression of the negative margin is evident over the subsequent two years, moving to -2.38% in 2021 and -0.57% in 2022. The margin transitioned to positive territory in 2023 at 0.05% and expanded to 0.18% in 2024, indicating that the entity has surpassed its cost of capital to generate genuine economic value.
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