Walmart Inc. (NYSE:WMT)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes experienced a decline from 18,200 million USD in 2020 to 13,880 million USD in 2023. However, there was a notable recovery in 2024 and 2025, with values increasing to 18,517 million USD and 22,003 million USD respectively. This suggests an initial period of contraction followed by a significant rebound.

Cost of Capital

The cost of capital showed a steady upward trend over the period analyzed, rising from 8.88% in 2020 to 9.73% in 2025. This gradual increase indicates a rising hurdle rate for investments.

Invested Capital

Invested capital decreased from 167,329 million USD in 2020 to a low of 149,558 million USD in 2023, reflecting a reduction in the capital base. In the last two years, it increased again, reaching 161,279 million USD by 2025. The pattern mirrors the trend observed in NOPAT, with contraction followed by expansion.

Economic Profit

Economic profit demonstrated volatility over the period. Starting at 3,346 million USD in 2020, it declined markedly to negative territory in 2023 (-83 million USD), indicating that the firm was not covering its cost of capital during that year. The subsequent years showed a strong recovery with economic profit rising sharply to 3,721 million USD in 2024 and further to 6,305 million USD in 2025, exceeding the initial levels from 2020.

Summary of Trends

The data reveals a period of declining profitability and invested capital from 2020 to 2023, accompanied by a rising cost of capital. This resulted in negative economic profit in 2023, signaling value destruction in that year. Following this downturn, the company experienced a robust improvement in operating profit and economic profit, along with increased invested capital from 2024 onward. The strengthening economic profit in the face of rising cost of capital suggests enhanced operational efficiency or improved returns on investment in recent years.

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 experienced significant fluctuations over the periods. It started at a high level in early 2020 with 3,346 million USD, then showed a gradual decline to 755 million USD by early 2022. A notable negative economic profit of -83 million USD occurred in early 2023, indicating a period of economic loss. However, there was a strong recovery afterward, reaching 3,721 million USD in early 2024 and further increasing to 6,305 million USD by early 2025.

Invested Capital

The invested capital demonstrated a generally declining trend from early 2020 (167,329 million USD) through early 2023 (149,558 million USD). Subsequently, the capital base increased modestly in early 2024 to 155,389 million USD and continued to rise in early 2025 to 161,279 million USD. Overall, there was a contraction followed by a partial recovery in the capital invested.

Economic Spread Ratio

The economic spread ratio mirrored the fluctuations seen in economic profit. It began at 2% in early 2020, slightly decreasing to 1.9% in early 2021, then falling sharply to 0.48% in early 2022 and turning negative at -0.06% in early 2023. This indicates a period where returns did not cover the cost of capital. There was a substantial rebound to 2.39% in early 2024 and a further increase to 3.91% by early 2025, signaling improving profitability relative to the capital invested.

Net Sales

The net sales figures demonstrate a consistent upward trend over the six-year period. Starting from approximately 519.9 billion US dollars in early 2020, sales increased steadily each year, reaching about 674.5 billion by early 2025. This indicates robust revenue growth and suggests effective sales strategies and market demand expansion.

Economic Profit

The economic profit shows notable volatility throughout the timeframe. Initially, it was positive, with around 3.35 billion US dollars in 2020, followed by a slight decline to about 3.13 billion in 2021. A sharp decrease occurred in 2022, dropping to 755 million, then further slipping into negative territory at -83 million in 2023. However, the subsequent years show a substantial recovery, with economic profit rising to 3.72 billion in 2024 and reaching 6.31 billion by 2025. This suggests periods of operational challenges or increased costs affecting profitability, followed by successful corrective measures or favorable market conditions enhancing economic value.

Economic Profit Margin

The economic profit margin percentage mirrors the fluctuations observed in economic profit. It started at 0.64% in 2020 and slightly decreased to 0.56% in 2021. A significant decline occurred in 2022, reaching 0.13%, before turning negative at -0.01% in 2023, reflecting the loss in economic profit that year. The margin then improved considerably in the last two years, achieving 0.58% in 2024 and rising further to 0.93% in 2025. This pattern signifies a temporary decline in profitability relative to sales, followed by a strong improvement in operational efficiency or value creation relative to sales revenue.

Overall Summary

The company experienced steady sales growth over the analyzed years, indicating a strong market presence and increasing revenue scale. Despite this, economic profitability encountered a period of severe downturn, notably in 2022 and 2023, likely indicating cost pressures, investment impacts, or other challenges. Nevertheless, the firm demonstrated a powerful rebound in both economic profit and margin starting in 2024, surpassing prior performance levels by 2025. This recovery highlights effective management responses and a return to generating substantial economic value relative to sales, pointing towards improved operational performance and financial health in the most recent periods.