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
TJX Cos. Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2026 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 5,910 – 15.25% × 25,048 = 2,090
The financial performance demonstrates a significant transition from value destruction to consistent value creation over the analyzed period. A substantial recovery is evident, as the organization shifted from a deep economic deficit in 2021 to a position of increasing economic profit by 2026.
- Net Operating Profit After Taxes (NOPAT)
- A sharp upward trajectory is observed in NOPAT, which rose from 270 million US dollars in 2021 to 5,910 million US dollars by 2026. The most dramatic increase occurred between 2021 and 2022, marking a pivotal recovery in operational profitability. Subsequent years show a steady and consistent growth pattern, indicating improved operational efficiency and revenue generation capabilities.
- Cost of Capital and Invested Capital
- The cost of capital has experienced a gradual and steady increase, rising from 13.83% in 2021 to 15.25% in 2026. Concurrently, invested capital decreased initially from 22,428 million US dollars in 2021 to 19,742 million US dollars in 2022, before entering a period of sustained expansion, reaching 25,048 million US dollars by 2026. This suggests a strategic reallocation and subsequent increase in the capital base to support growth.
- Economic Profit
- Economic profit underwent a complete reversal, moving from a loss of 2,833 million US dollars in 2021 to a positive value of 2,090 million US dollars in 2026. Despite the rising cost of capital, the growth in NOPAT significantly outpaced the increase in the capital charge. This trend confirms that the company is generating returns well above its weighted average cost of capital, thereby creating substantial economic value for shareholders.
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Net Operating Profit after Taxes (NOPAT)
TJX Cos. Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in deferred gift card revenue.
3 Addition of increase (decrease) in equity equivalents to net income.
4 2026 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 10,620 × 3.90% = 414
5 2026 Calculation
Tax benefit of interest expense, excluding capitalized interest = Adjusted interest expense, excluding capitalized interest × Statutory income tax rate
= 488 × 21.00% = 103
6 Addition of after taxes interest expense to net income.
7 2026 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 195 × 21.00% = 41
8 Elimination of after taxes investment income.
Net operating profit after taxes (NOPAT) demonstrates a significant upward trend over the observed period. Beginning at US$270 million in January 2021, NOPAT experienced substantial growth through January 2026, reaching US$5,910 million. This represents a more than twenty-fold increase over the five-year span.
- Overall Trend
- The period is characterized by consistent and accelerating growth in NOPAT. While the initial value is relatively low, the subsequent years show progressively larger absolute increases.
- Year-over-Year Changes
- From January 2021 to January 2022, NOPAT increased by US$3,342 million. The increase from January 2022 to January 2023 was US$191 million, a considerably smaller absolute change. The growth from January 2023 to February 2024 was US$833 million. Further growth occurred from February 2024 to February 2025, with an increase of US$446 million. Finally, from February 2025 to January 2026, NOPAT increased by US$828 million.
- Comparison to Net Income
- NOPAT consistently exceeds net income throughout the period. In January 2021, NOPAT was US$270 million while net income was US$90 million. This relationship continues through January 2026, where NOPAT is US$5,910 million and net income is US$5,494 million. The difference between NOPAT and net income suggests significant non-operating expenses or other adjustments impacting reported net income.
The observed growth in NOPAT indicates improving operational efficiency and profitability. The consistent difference between NOPAT and net income warrants further investigation to understand the nature of the adjustments made to arrive at NOPAT.
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Cash Operating Taxes
TJX Cos. Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30).
The provision for income taxes and cash operating taxes both demonstrate a clear upward trend over the observed period. While the provision for income taxes fluctuated, beginning with a benefit in 2021, it consistently increased from 2022 through 2026. Cash operating taxes exhibited a more consistent increase throughout the same timeframe.
- Provision for Income Taxes
- In 2021, a benefit of US$1 million was recorded. This was followed by a substantial increase to US$1,115 million in 2022 and a further increase to US$1,138 million in 2023. The provision continued to rise, reaching US$1,493 million in 2024, US$1,619 million in 2025, and US$1,805 million in 2026. This indicates a growing tax liability over the period.
- Cash Operating Taxes
- Cash operating taxes began at US$320 million in 2021. An increase to US$1,229 million was observed in 2022, followed by a slight decrease to US$1,128 million in 2023. Subsequent years show consistent growth, with values of US$1,532 million in 2024, US$1,628 million in 2025, and US$1,756 million in 2026. The overall trend is positive, despite the minor dip in 2023.
- Relationship between Provision and Cash Taxes
- Cash operating taxes consistently exceeded the provision for income taxes from 2022 through 2026. The difference between the two values suggests potential timing differences between reported income tax expense and actual cash payments. The initial benefit recorded in the provision for income taxes in 2021 resulted in cash operating taxes being significantly higher than the provision in that year.
The consistent growth in both measures suggests increasing profitability or changes in the applicable tax rate, or a combination of both. Further investigation into the underlying drivers of these increases would be necessary to fully understand the implications for financial performance.
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Invested Capital
TJX Cos. Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of deferred gift card revenue.
4 Addition of equity equivalents to shareholders’ equity.
5 Removal of accumulated other comprehensive income.
The reported invested capital exhibited fluctuations over the observed period. Initially, a decrease is noted, followed by a period of relative stabilization and then a consistent upward trend. A detailed examination of the components contributing to invested capital reveals further insights.
- Total Invested Capital
- Invested capital decreased from US$22,428 million in January 2021 to US$19,742 million in January 2022, representing a decline of approximately 12%. Subsequently, it experienced a modest increase to US$20,404 million in January 2023. From January 2023 through January 2026, a consistent upward trajectory is observed, reaching US$25,048 million. This represents an overall increase of approximately 11.7% from January 2023 to January 2026.
- Debt & Leases
- Total reported debt and leases decreased significantly from US$15,503 million in January 2021 to US$12,507 million in January 2022, a reduction of roughly 19.3%. The level of debt remained relatively stable between January 2022 and February 2024, fluctuating between US$12,507 million and US$12,778 million. A subsequent increase is observed, reaching US$13,489 million in January 2026, indicating a renewed reliance on debt financing.
- Shareholders’ Equity
- Shareholders’ equity demonstrated a consistent upward trend throughout the period. It increased from US$5,833 million in January 2021 to US$10,190 million in January 2026. This represents a substantial increase of approximately 74.6% over the five-year period. The rate of increase accelerated from 2023 to 2025, with larger year-over-year gains.
The increase in invested capital from 2023 onwards appears to be primarily driven by growth in shareholders’ equity, partially offset by fluctuations in debt levels. The initial decrease in invested capital in 2022 was largely attributable to the reduction in reported debt and leases. The composition of invested capital is shifting towards a greater proportion of equity financing.
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Cost of Capital
TJX Cos. Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 176,758) | 176,758) | ÷ | 190,107) | = | 0.93 | 0.93 | × | 16.18% | = | 15.05% | ||
| Long-term debt, inclusive of current portion3 | 2,729) | 2,729) | ÷ | 190,107) | = | 0.01 | 0.01 | × | 2.56% × (1 – 21.00%) | = | 0.03% | ||
| Operating lease liability4 | 10,620) | 10,620) | ÷ | 190,107) | = | 0.06 | 0.06 | × | 3.90% × (1 – 21.00%) | = | 0.17% | ||
| Total: | 190,107) | 1.00 | 15.25% | ||||||||||
Based on: 10-K (reporting date: 2026-01-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, inclusive of current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 139,559) | 139,559) | ÷ | 152,105) | = | 0.92 | 0.92 | × | 16.18% | = | 14.85% | ||
| Long-term debt, inclusive of current portion3 | 2,634) | 2,634) | ÷ | 152,105) | = | 0.02 | 0.02 | × | 2.56% × (1 – 21.00%) | = | 0.04% | ||
| Operating lease liability4 | 9,912) | 9,912) | ÷ | 152,105) | = | 0.07 | 0.07 | × | 3.60% × (1 – 21.00%) | = | 0.19% | ||
| Total: | 152,105) | 1.00 | 15.07% | ||||||||||
Based on: 10-K (reporting date: 2025-02-01).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, inclusive of current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 110,216) | 110,216) | ÷ | 122,526) | = | 0.90 | 0.90 | × | 16.18% | = | 14.56% | ||
| Long-term debt, inclusive of current portion3 | 2,630) | 2,630) | ÷ | 122,526) | = | 0.02 | 0.02 | × | 2.56% × (1 – 21.00%) | = | 0.04% | ||
| Operating lease liability4 | 9,680) | 9,680) | ÷ | 122,526) | = | 0.08 | 0.08 | × | 3.30% × (1 – 21.00%) | = | 0.21% | ||
| Total: | 122,526) | 1.00 | 14.81% | ||||||||||
Based on: 10-K (reporting date: 2024-02-03).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, inclusive of current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 88,229) | 88,229) | ÷ | 100,728) | = | 0.88 | 0.88 | × | 16.18% | = | 14.18% | ||
| Long-term debt, inclusive of current portion3 | 3,114) | 3,114) | ÷ | 100,728) | = | 0.03 | 0.03 | × | 2.55% × (1 – 21.00%) | = | 0.06% | ||
| Operating lease liability4 | 9,385) | 9,385) | ÷ | 100,728) | = | 0.09 | 0.09 | × | 2.70% × (1 – 21.00%) | = | 0.20% | ||
| Total: | 100,728) | 1.00 | 14.44% | ||||||||||
Based on: 10-K (reporting date: 2023-01-28).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, inclusive of current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 72,864) | 72,864) | ÷ | 85,516) | = | 0.85 | 0.85 | × | 16.18% | = | 13.79% | ||
| Long-term debt, inclusive of current portion3 | 3,500) | 3,500) | ÷ | 85,516) | = | 0.04 | 0.04 | × | 2.55% × (1 – 21.00%) | = | 0.08% | ||
| Operating lease liability4 | 9,152) | 9,152) | ÷ | 85,516) | = | 0.11 | 0.11 | × | 2.40% × (1 – 21.00%) | = | 0.20% | ||
| Total: | 85,516) | 1.00 | 14.07% | ||||||||||
Based on: 10-K (reporting date: 2022-01-29).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, inclusive of current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 79,775) | 79,775) | ÷ | 95,850) | = | 0.83 | 0.83 | × | 16.18% | = | 13.47% | ||
| Long-term debt, inclusive of current portion3 | 6,654) | 6,654) | ÷ | 95,850) | = | 0.07 | 0.07 | × | 2.94% × (1 – 21.00%) | = | 0.16% | ||
| Operating lease liability4 | 9,421) | 9,421) | ÷ | 95,850) | = | 0.10 | 0.10 | × | 2.60% × (1 – 21.00%) | = | 0.20% | ||
| Total: | 95,850) | 1.00 | 13.83% | ||||||||||
Based on: 10-K (reporting date: 2021-01-30).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, inclusive of current portion. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
TJX Cos. Inc., economic spread ratio calculation, comparison to benchmarks
| Jan 31, 2026 | Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 2,090) | 1,675) | 1,508) | 857) | 834) | (2,833) | |
| Invested capital2 | 25,048) | 22,612) | 21,125) | 20,404) | 19,742) | 22,428) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 8.34% | 7.41% | 7.14% | 4.20% | 4.22% | -12.63% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Amazon.com Inc. | — | -1.49% | -5.13% | -10.66% | -21.61% | -1.84% | |
| Home Depot Inc. | 4.63% | 6.89% | 12.88% | 16.94% | 21.39% | 12.23% | |
| Lowe’s Cos. Inc. | 7.85% | 15.91% | 18.68% | 13.68% | 21.65% | 9.20% | |
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30).
1 Economic profit. See details »
2 Invested capital. See details »
3 2026 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,090 ÷ 25,048 = 8.34%
4 Click competitor name to see calculations.
The financial trajectory indicates a significant recovery in value creation, transitioning from substantial economic losses to a period of sustained growth in both absolute economic profit and efficiency metrics.
- Economic Profit Analysis
- A sharp reversal is observed between January 2021 and January 2022, as economic profit shifted from a deficit of 2,833 million US dollars to a surplus of 834 million US dollars. This positive momentum continued throughout the period, with a steady climb to 1,508 million US dollars by February 2024 and reaching 2,090 million US dollars by January 2026. This trend demonstrates a consistent increase in the company's ability to generate returns exceeding its cost of capital.
- Invested Capital Trends
- Invested capital decreased from 22,428 million US dollars in January 2021 to 19,742 million US dollars in January 2022. Following this contraction, a persistent upward trend is evident, with capital increasing annually to reach 25,048 million US dollars by January 2026. The simultaneous growth in both invested capital and economic profit suggests that new capital allocations are being deployed efficiently to drive value.
- Economic Spread Ratio Evaluation
- The economic spread ratio mirrors the recovery in profitability, moving from a deep negative of -12.63% in January 2021 to 4.22% in January 2022. Following a period of stabilization between 2022 and 2023, the ratio accelerated upward, reaching 7.14% in February 2024 and ultimately peaking at 8.34% in January 2026. This expansion indicates a widening gap between the return on invested capital and the weighted average cost of capital, signaling improved financial productivity.
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Economic Profit Margin
TJX Cos. Inc., economic profit margin calculation, comparison to benchmarks
| Jan 31, 2026 | Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 2,090) | 1,675) | 1,508) | 857) | 834) | (2,833) | |
| Net sales | 60,372) | 56,360) | 54,217) | 49,936) | 48,550) | 32,137) | |
| Add: Increase (decrease) in deferred gift card revenue | 73) | 51) | 52) | 36) | 109) | 75) | |
| Adjusted net sales | 60,445) | 56,411) | 54,269) | 49,972) | 48,659) | 32,212) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 3.46% | 2.97% | 2.78% | 1.72% | 1.71% | -8.79% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Amazon.com Inc. | — | -0.99% | -3.00% | -6.01% | -11.28% | -0.79% | |
| Home Depot Inc. | 2.31% | 3.15% | 4.72% | 5.95% | 6.80% | 4.60% | |
| Lowe’s Cos. Inc. | 3.35% | 5.00% | 5.61% | 3.49% | 5.89% | 2.91% | |
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30).
1 Economic profit. See details »
2 2026 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × 2,090 ÷ 60,445 = 3.46%
3 Click competitor name to see calculations.
The financial trajectory from January 30, 2021, to January 31, 2026, is characterized by a significant recovery in value creation and a consistent expansion of the revenue base. A transition from substantial economic loss to sustained economic profit indicates a successful turnaround in capital efficiency and operational performance.
- Economic Profit Trend
- A sharp reversal is observed starting in 2022, where economic profit shifted from a deficit of 2,833 million USD to a surplus of 834 million USD. This positive momentum continued through 2026, with the figure increasing steadily to 2,090 million USD, reflecting a capacity to generate returns well above the cost of capital.
- Adjusted Net Sales Growth
- Revenue exhibited a strong upward trend throughout the period. A notable surge occurred between 2021 and 2022, with sales increasing from 32,212 million USD to 48,659 million USD. Growth remained consistent thereafter, ultimately reaching 60,445 million USD by the end of the period, suggesting a broadening market presence or increased sales volume.
- Economic Profit Margin Evolution
- The economic profit margin mirrored the recovery of absolute economic profit, rising from a low of -8.79% in 2021 to 3.46% by 2026. The margin stabilized slightly between 2022 and 2023 at approximately 1.7%, before entering a phase of continuous improvement from 2024 onward. This expansion indicates that the organization is not only growing in size but is also increasing the efficiency with which it converts sales into economic value.
The correlation between the rise in adjusted net sales and the expansion of the economic profit margin suggests that the growth in scale has been accompanied by improved operational leverage. The consistent increase in the margin from 2.78% in 2024 to 3.46% in 2026 confirms a strengthening of the company's ability to generate value relative to its total revenue.
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