Stock Analysis on Net

Thermo Fisher Scientific Inc. (NYSE:TMO)

$24.99

Economic Value Added (EVA)

Microsoft Excel

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Economic Profit

Thermo Fisher Scientific Inc., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

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
= × =


Net Operating Profit After Taxes (NOPAT)
The NOPAT showed an initial increase from 6,545 million US dollars in 2020 to 7,465 million US dollars in 2021. However, it subsequently declined to 6,425 million in 2022 and continued decreasing to 5,117 million in 2023. A slight recovery was observed in 2024, reaching 5,400 million dollars. Overall, the trend reveals a peak in 2021 followed by a downward trajectory, with some recovery in the final year.
Cost of Capital
The cost of capital remained relatively stable over the period, fluctuating marginally between 10.73% and 11.12%. This consistency indicates a stable financing cost environment for the company during these years.
Invested Capital
Invested capital increased significantly from 61,158 million US dollars in 2020 to 79,776 million in 2021. The upward trend continued, albeit at a slower pace, reaching a peak of 85,573 million in 2023 before declining slightly to 82,071 million in 2024. This indicates substantial asset base growth, with some reduction in the last observed year.
Economic Profit
Economic profit exhibited a consistently negative pattern throughout the period. It worsened from -255 million US dollars in 2020 to -1,095 million in 2021 and further deteriorated sharply to -2,687 million in 2022. The negative trend deepened further to -4,296 million in 2023, followed by a marginal improvement to -3,708 million in 2024. This persistent negative economic profit suggests that the returns generated did not cover the cost of capital across all years, with losses intensifying until 2023 and slightly easing thereafter.

Net Operating Profit after Taxes (NOPAT)

Thermo Fisher Scientific Inc., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income attributable to Thermo Fisher Scientific Inc.
Deferred income tax expense (benefit)1
Increase (decrease) in allowances2
Increase (decrease) in LIFO reserve3
Increase (decrease) in accrued restructuring costs4
Increase (decrease) in equity equivalents5
Interest expense
Interest expense, operating lease liability6
Adjusted interest expense
Tax benefit of interest expense7
Adjusted interest expense, after taxes8
Interest income
Investment income, before taxes
Tax expense (benefit) of investment income9
Investment income, after taxes10
Net income (loss) attributable to noncontrolling interest
Net operating profit after taxes (NOPAT)

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowances.

3 Addition of increase (decrease) in LIFO reserve. See details »

4 Addition of increase (decrease) in accrued restructuring costs.

5 Addition of increase (decrease) in equity equivalents to net income attributable to Thermo Fisher Scientific Inc..

6 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

7 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =

8 Addition of after taxes interest expense to net income attributable to Thermo Fisher Scientific Inc..

9 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

10 Elimination of after taxes investment income.


Net Income Attributable to Thermo Fisher Scientific Inc.
The net income shows an overall fluctuating trend during the analyzed period. It increased significantly from 6375 million US dollars in 2020 to a peak of 7725 million US dollars in 2021. However, this was followed by a decline over the next two years, reaching 5995 million US dollars in 2023. A modest recovery is observed in 2024, with net income rising to 6335 million US dollars, though it remains below the 2021 peak.
Net Operating Profit After Taxes (NOPAT)
The NOPAT values illustrate a pattern consistent with net income, with initial growth from 6545 million US dollars in 2020 to 7465 million US dollars in 2021. Subsequently, there is a notable decrease to 6425 million US dollars in 2022, followed by a sharper decline to 5117 million US dollars in 2023. A recovery phase occurs in 2024, where NOPAT increases to 5400 million US dollars, yet it still remains considerably lower than the earlier years.
Summary of Trends
The financial performance, as measured by both net income and NOPAT, peaked in 2021 and then experienced a downward adjustment for two consecutive years. Despite some recovery in 2024, neither metric returned to the highs seen in 2021. This pattern suggests a period of robust profitability followed by challenges that impacted the company’s earnings and operating efficiency, with partial improvement toward the end of the period.

Cash Operating Taxes

Thermo Fisher Scientific Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Provision for income taxes
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense
Less: Tax imposed on investment income
Cash operating taxes

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).


The financial data reveals notable fluctuations in tax-related expenses over the five-year period ending in 2024. Two key categories, provision for income taxes and cash operating taxes, demonstrate distinct trends.

Provision for Income Taxes
The provision for income taxes exhibits significant volatility. Starting at 850 million USD in 2020, it increased sharply to 1,109 million USD in 2021. However, in 2022, the provision decreased substantially to 703 million USD, followed by a further decline to 284 million USD in 2023. A notable rebound occurs in 2024, with the provision rising again to 657 million USD. This pattern suggests variability in the company's tax liabilities or effective tax rate, possibly influenced by changes in pre-tax earnings, tax regulations, or one-time adjustments.
Cash Operating Taxes
Cash operating taxes show a generally upward trend with some minor fluctuations. Beginning at 1,227 million USD in 2020, these taxes increased substantially to 1,866 million USD in 2021. The level then remained relatively stable through 2022 at 1,806 million USD and slightly decreased to 1,701 million USD in 2023. In 2024, cash operating taxes resumed growth, reaching 1,946 million USD, the highest in the observed period. This steady increase indicates rising cash outflows for tax payments, which may reflect higher taxable income, changes in tax rates, or both.

In summary, while cash operating taxes demonstrate a mostly consistent upward trajectory, the provision for income taxes is marked by pronounced variability. The divergence in trends between these two items could imply timing differences between tax expenses recorded and actual cash paid or adjustments related to deferred taxes or tax planning strategies.


Invested Capital

Thermo Fisher Scientific Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Short-term obligations and current maturities of long-term obligations
Long-term obligations, excluding current maturities
Operating lease liability1
Total reported debt & leases
Total Thermo Fisher Scientific Inc. shareholders’ equity
Net deferred tax (assets) liabilities2
Allowances3
LIFO reserve4
Accrued restructuring costs5
Equity equivalents6
Accumulated other comprehensive (income) loss, net of tax7
Redeemable noncontrolling interest
Noncontrolling interests
Adjusted total Thermo Fisher Scientific Inc. shareholders’ equity
Construction in progress8
Investments measured at fair value on a recurring basis9
Invested capital

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

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 LIFO reserve. See details »

5 Addition of accrued restructuring costs.

6 Addition of equity equivalents to total Thermo Fisher Scientific Inc. shareholders’ equity.

7 Removal of accumulated other comprehensive income.

8 Subtraction of construction in progress.

9 Subtraction of investments measured at fair value on a recurring basis.


Total Reported Debt & Leases
The total reported debt and leases showed a significant increase from 22,545 million USD at the end of 2020 to 36,339 million USD in 2021. Subsequently, it remained relatively stable, with slight fluctuations around the 36,000 million USD mark through 2023, before decreasing to 32,775 million USD by the end of 2024. This pattern suggests a major debt acquisition or lease increase occurred between 2020 and 2021, followed by stabilization and moderate deleveraging in the final year observed.
Total Shareholders’ Equity
Shareholders’ equity demonstrated a consistent upward trend throughout the period, increasing from 34,507 million USD in 2020 to 49,584 million USD in 2024. The growth rate appears steady year-over-year, indicating sustained value creation and possible retained earnings or capital injections contributing to strengthening the equity base.
Invested Capital
Invested capital experienced a marked increase from 61,158 million USD at the end of 2020 to a peak of 85,573 million USD in 2023. However, in 2024, it declined to 82,071 million USD. The growth in invested capital through most of the period indicates expansion or investment activities, while the slight downturn in the final year could reflect divestitures, asset write-downs, or a moderation in capital expenditures.

Cost of Capital

Thermo Fisher Scientific Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt obligations3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2024-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt obligations3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt obligations3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt obligations3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt obligations3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt obligations. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Thermo Fisher Scientific Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
AbbVie Inc.
Amgen Inc.
Bristol-Myers Squibb Co.
Danaher Corp.
Eli Lilly & Co.
Gilead Sciences Inc.
Johnson & Johnson
Merck & Co. Inc.
Pfizer Inc.
Regeneron Pharmaceuticals Inc.
Vertex Pharmaceuticals Inc.

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.


Economic Profit
The economic profit has shown a continuous decline from -255 million US dollars in 2020 to a low point of -4296 million US dollars in 2023. There is a slight improvement in 2024 as the loss decreases to -3708 million US dollars, but it remains significantly negative, indicating persistent value destruction over these years.
Invested Capital
The invested capital has experienced a steady increase from 61,158 million US dollars in 2020 to a peak of 85,573 million US dollars in 2023. However, in 2024, a reduction is observed with invested capital decreasing to 82,071 million US dollars, suggesting a possible divestment or asset optimization.
Economic Spread Ratio
The economic spread ratio has remained negative throughout the period, deteriorating sharply from -0.42% in 2020 to -5.02% in 2023. In 2024, there is a slight recovery to -4.52%, but the ratio still reflects a costly capital deployment relative to returns, implying challenges in generating returns above the cost of capital.

Economic Profit Margin

Thermo Fisher Scientific Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1
Revenues
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
AbbVie Inc.
Amgen Inc.
Bristol-Myers Squibb Co.
Danaher Corp.
Eli Lilly & Co.
Gilead Sciences Inc.
Johnson & Johnson
Merck & Co. Inc.
Pfizer Inc.
Regeneron Pharmaceuticals Inc.
Vertex Pharmaceuticals Inc.

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × ÷ =

3 Click competitor name to see calculations.


Revenues
The company experienced a consistent increase in revenues from 2020 to 2022, rising from approximately US$32.2 billion to US$44.9 billion. However, in 2023, revenues declined slightly to about US$42.9 billion and then stabilized with a marginal increase to US$42.9 billion in 2024.
Economic Profit
Throughout the period under review, the economic profit was negative every year, indicating that the company did not generate returns exceeding its cost of capital. The negative economic profit deepened significantly from -US$255 million in 2020 to -US$4.3 billion in 2023. Although there was a slight improvement in 2024, the loss remained substantial at approximately -US$3.7 billion.
Economic Profit Margin
The economic profit margin, representing economic profit as a percentage of revenues, showed a declining trend similar to the economic profit. It decreased from -0.79% in 2020 to a low of -10.02% in 2023. In 2024, there was a partial recovery to -8.65%, but the margin continued to indicate significant value destruction relative to revenues.
Overall Analysis
The data reveals a revenue growth phase through 2022, followed by stabilization and a slight reduction in the last two years. However, the company faced intensifying challenges in creating economic value, as reflected by increasingly negative economic profit and margins, despite growing or stable revenues. The partial recovery in economic profit and margin in 2024 suggests some operational or strategic improvements but does not offset the pronounced historical declines in economic profitability.