Walmart Inc. (NYSE:WMT)

Net Operating Profit After Taxes (NOPAT)

Over the observed periods, NOPAT experienced a decline from 18,200 million US dollars in early 2020 to a low point of 13,880 million in early 2023. Subsequently, it showed a robust recovery, increasing to 18,517 million in 2024 and further to 22,003 million in 2025. This indicates a period of contraction followed by strong growth in operating profitability after taxes.

Cost of Capital

The cost of capital exhibited a gradual upward trend, rising from 8.86% in 2020 to 9.72% in 2025. This steady increase suggests a rising hurdle rate for investment returns, potentially reflecting changes in market conditions or company risk profile.

Invested Capital

Invested capital showed a downward trend from 167,329 million US dollars in 2020 to 149,558 million in 2023. Thereafter, it increased moderately, reaching 161,279 million by 2025. This pattern suggests an initial period of capital reduction or divestment, followed by reinvestment or growth cautiously resuming.

Economic Profit

Economic profit demonstrated significant volatility. It declined sharply from 3,373 million in 2020 to a negative value of -57 million in 2023, indicating a phase when operating returns barely covered or fell below the cost of capital. However, a substantial recovery followed, with economic profit rising to 3,749 million in 2024 and doubling to 6,335 million in 2025. This recovery reflects improved value creation and efficient capital use in the latter periods.

Overall Analysis

The data indicate a challenging period in the early 2020s, characterized by declining profitability, reduced invested capital, and deteriorating economic profit. This period corresponded with rising cost of capital, potentially compressing economic value added. However, the most recent years show a marked improvement across all key metrics. The resurgence in NOPAT and economic profit, alongside the moderate increase in invested capital, suggests that the company successfully navigated previous difficulties and enhanced its capital efficiency and profit-generating capability under a higher cost of capital environment.

Consolidated net income attributable to Walmart

The net income shows a fluctuating trend over the years. It started at 14,881 million USD in 2020, decreased to 13,510 million USD in 2021, and slightly increased to 13,673 million USD in 2022. There was a notable decline in 2023 to 11,680 million USD. However, in the subsequent years, a significant recovery and growth are observed, with net income rising to 15,511 million USD in 2024 and further increasing sharply to 19,436 million USD in 2025.

Net operating profit after taxes (NOPAT)

NOPAT demonstrates a general downward trend between 2020 and 2023, beginning at 18,200 million USD in 2020 and decreasing to 18,130 million USD in 2021. This decline continues more sharply through 2022 (15,307 million USD) and 2023 (13,880 million USD). From 2024 onwards, a strong recovery is evident, with NOPAT rising significantly to 18,517 million USD and then to 22,003 million USD in 2025.

Overall Analysis

Both net income and NOPAT experienced declines during the early years, particularly from 2020 to 2023, suggesting pressures on profitability possibly due to operational or market challenges. The drop in NOPAT is more pronounced, indicating operational efficiency or cost factors impacting returns after taxes. From 2024 to 2025, a notable reversal occurs, showing substantial growth in both profitability measures that surpass the initial levels reported in 2020. This suggests the company improved its operational performance and overall profitability during the latter period, potentially reflecting successful strategic initiatives, enhanced revenue generation, or cost management improvements.

The analysis of the provision for income taxes and cash operating taxes over the reported years reveals several key trends and insights into the company's tax-related financial performance.

Provision for Income Taxes

The provision for income taxes exhibits fluctuation across the examined periods. Starting at a lower level in the earliest year, it increased significantly in the second year, reaching its highest recorded value during this span. Following this peak, the provision decreased notably in the third year, indicating variability in taxable income or changes in tax regulations. Subsequently, it showed a moderate upward trend in the last two years, though not surpassing the earlier peak. Overall, this item demonstrates a pattern of volatility rather than steady growth or decline.

Cash Operating Taxes

Cash operating taxes show a generally increasing trend over the entire period. The values rise steadily year over year with minor deviations, suggesting growing tax cash outflows possibly driven by increased operating income or changes in cash tax settlement timing. The most notable increase occurs in the final year analyzed, which could indicate heightened tax payments or shifts in tax planning strategies resulting in greater actual cash disbursements for taxes.

Comparison and Interpretation

The divergence between provision for income taxes and cash operating taxes is apparent, where cash taxes consistently trend upwards more smoothly, whereas provisions are more volatile. This may reflect differences in accrual versus cash accounting methods for taxes, timing differences in tax payments, or adjustments due to tax law changes or deferred tax assets and liabilities. The steady increase in cash operating taxes, particularly the sharp rise in the latest period, warrants further investigation into the company's tax payment policies and operational profitability.

Total reported debt & leases

The total reported debt and leases exhibit a decreasing trend from January 31, 2020, to January 31, 2022, declining from 72,433 million US dollars to 57,323 million US dollars. This downward trend is somewhat reversed in the subsequent periods, with an increase to 61,321 million US dollars by January 31, 2024, before a slight decrease to 60,114 million US dollars in January 31, 2025. Overall, the debt and leases remain below the initial 2020 level, indicating a reduction over the five-year span despite minor fluctuations.

Total Walmart shareholders’ equity

Shareholders' equity shows a generally increasing trajectory over the analyzed periods. Starting at 74,669 million US dollars in January 2020, it rises steadily to peak at 83,253 million US dollars in January 2022. Although a dip occurs in January 2023 to 76,693 million US dollars, the equity rebounds strongly in subsequent years, reaching 91,013 million US dollars by January 2025. This pattern suggests growth in the company’s net value with temporary volatility in early 2023.

Invested capital

Invested capital demonstrates a consistent downward trend from 167,329 million US dollars in January 2020 to a low of 149,558 million US dollars in January 2023. However, after this point, there is an upward correction onward to 161,279 million US dollars by January 2025. This movement could reflect strategic capital management with periods of capital reduction followed by reinvestment or asset growth.

Economic Profit

The economic profit showed a declining trend from 2020 to 2023, dropping from 3,373 million US dollars in 2020 to a negative figure of -57 million US dollars in 2023. This represents a significant deterioration in value creation over that period. However, there was a strong recovery thereafter, with economic profit increasing sharply to 3,749 million US dollars in 2024 and further to 6,335 million US dollars in 2025, indicating a robust turnaround and improved operational performance.

Invested Capital

The invested capital decreased between 2020 and 2023, falling steadily from 167,329 million US dollars in 2020 to 149,558 million US dollars in 2023. This suggests a reduction in the capital base during those years. Following this period, invested capital increased again, reaching 155,389 million US dollars in 2024 and 161,279 million US dollars in 2025, indicating renewed investment or asset growth.

Economic Spread Ratio

The economic spread ratio decreased from 2.02% in 2020 to a marginally negative level of -0.04% in 2023, reflecting a diminishing return on invested capital relative to cost. This metric then significantly improved, rising to 2.41% in 2024 and further to 3.93% in 2025, demonstrating enhanced profitability and efficient use of capital during the latter period.

Summary

The data reveals a period of declining value creation and reduced capital investment from 2020 through 2023, culminating in negative economic profit and almost zero economic spread. After 2023, there is a clear and strong recovery with improvements across all observed metrics, suggesting effective management actions or favorable market conditions that restored and enhanced corporate profitability and asset utilization.

Economic Profit

The economic profit demonstrated considerable variability over the observed period. Starting at 3,373 million US dollars in early 2020, it slightly declined to 3,159 million in 2021. A sharp decrease followed in 2022, dropping to 782 million, and further declined to a negative value of -57 million in 2023. However, there was a strong recovery in the subsequent years, with economic profit rising significantly to 3,749 million in 2024 and reaching 6,335 million in 2025, indicating enhanced profitability and value creation towards the latter part of the timeline.

Net Sales

Net sales showed a consistent upward trend throughout the period under review. Beginning at 519,926 million US dollars in 2020, net sales increased steadily each year, reaching 674,538 million by the start of 2025. This reflects sustained growth in revenue generation, suggesting an expanding customer base or improved sales performance over time.

Economic Profit Margin

The economic profit margin followed a pattern similar to that of economic profit, though expressed in percentage terms. It started at 0.65% in January 2020 and decreased progressively to 0.57% in 2021 and further to 0.14% in 2022. The margin temporarily turned negative in 2023 at -0.01%, indicating a period where economic profit was insufficient relative to sales. Thereafter, the margin recovered to 0.58% in 2024 and improved significantly to 0.94% in 2025. This recovery and growth in margin percentage highlight improved operational efficiency or profitability relative to net sales in the later years.