Walmart Inc. (NYSE:WMT)

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibits a fluctuating trend over the six-year period. From 2020 to 2021, it slightly decreased from 18,200 million USD to 18,130 million USD. A notable decline occurred between 2021 and 2023, reaching a low of 13,880 million USD in 2023. However, a strong recovery is observed post-2023, with NOPAT rising substantially to 18,517 million USD in 2024 and further to 22,003 million USD in 2025, surpassing previous years' figures.

Cost of Capital

The cost of capital shows a steady upward trajectory over the examined years. It increased from 8.93% in 2020 to 9.79% in 2025, indicating a gradual rise in the company's required rate of return or risk profile. This increase could reflect changes in market conditions or company-specific risk factors.

Invested Capital

Invested capital demonstrates a declining trend from 2020 through 2023, falling from 167,329 million USD to 149,558 million USD. In 2024 and 2025, invested capital begins to recover, rising to 155,389 million USD and 161,279 million USD respectively, suggesting renewed investment or asset additions after a period of reduction.

Economic Profit

Economic profit shows significant variability across the periods. It starts robustly at 3,259 million USD in 2020 and slightly declines to 3,042 million USD in 2021. A sharp downturn occurs in 2022 and 2023, with economic profit dropping dramatically to 667 million USD and then to a negative figure of -167 million USD, indicating a phase where the company failed to cover its cost of capital. From 2024 onwards, economic profit recovers strongly, reaching 3,631 million USD and further improving to 6,208 million USD in 2025, indicating enhanced value creation and operational efficiency.

Summary of Trends and Insights

Over the six-year span, the company’s financial performance showed an initial phase of stability, followed by a period of decline in profitability and economic profit, alongside a decrease in invested capital. Despite rising cost of capital, the company managed to reverse negative trends after 2023, evidenced by increased NOPAT, invested capital, and notably strong economic profit, suggesting a strategic turnaround and more effective capital utilization 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 Analysis

The economic profit exhibits significant fluctuations over the reported periods. Initially, there was a relatively strong economic profit of 3,259 million US dollars in 2020, followed by a slight decline to 3,042 million in 2021. A notable decrease occurred in 2022, with economic profit dropping sharply to 667 million and turning negative at -167 million in 2023, indicating a loss in value creation during that year. However, the company recovered substantially in the subsequent years, reaching 3,631 million in 2024 and further increasing to 6,208 million in 2025, marking the highest economic profit in the observed span.

Invested Capital Trends

Invested capital demonstrates a gradual downward trend from 167,329 million in 2020 to a low of 149,558 million in 2023. Starting in 2024, invested capital began to increase again, rising to 155,389 million and further to 161,279 million by 2025. This pattern indicates a period of capital reduction followed by renewed investment activity toward the end of the dataset.

Economic Spread Ratio Development

The economic spread ratio, a percentage measure reflecting the return on invested capital relative to cost, shows variability aligned with economic profit trends. Beginning at 1.95% in 2020, the ratio slightly declined to 1.85% in 2021 and dropped significantly to 0.43% in 2022, turning negative at -0.11% in 2023. These results reflect diminishing economic value creation during those middle years. Recovery is evident thereafter, with the spread ratio rising sharply to 2.34% in 2024 and then to 3.85% in 2025, suggesting improved efficiency and profitability relative to invested capital in the latter years.

Summary of Financial Performance Patterns

The data reveal a cyclical pattern where the company faced a downturn in economic profit and efficiency around 2022 and 2023, coinciding with reduced invested capital. Subsequent years show a strong rebound in both profitability and capital investment, indicating a strategic revitalization or favorable market conditions contributing to enhanced financial performance. The improvement in economic spread ratio underscores a more effective generation of returns relative to invested assets, signaling positive operational adjustments or growth initiatives implemented during the recovery period.

Net Sales

The net sales have shown a consistent upward trend over the six-year period. Starting at $519,926 million in 2020, sales increased each year, reaching $674,538 million by 2025. This steady growth indicates strong revenue expansion and market presence.

Economic Profit

The economic profit experienced fluctuations throughout the period. Initially, economic profit was $3,259 million in 2020, followed by a slight decline to $3,042 million in 2021. A significant drop occurred in 2022 and 2023, with values of $667 million and a negative $167 million, respectively. Subsequently, economic profit rebounded sharply to $3,631 million in 2024 and further increased to $6,208 million in 2025, reflecting a strong recovery and improvement in underlying profitability.

Economic Profit Margin

The economic profit margin showed a similar pattern to economic profit with volatility over the years. It started at 0.63% in 2020 and declined gradually to 0.55% in 2021 and a low of 0.12% in 2022. The margin turned negative in 2023 with -0.03%, indicating a loss in economic profit relative to sales. However, the margin improved significantly to 0.57% in 2024 and further to 0.92% in 2025, surpassing earlier years and suggesting enhanced efficiency or profitability.

Overall Insights

The data reveals continuous growth in net sales, which indicates expanding operations and revenue. However, economic profit and its margin demonstrate volatility, with a notable dip into negative territory in 2023. The subsequent years exhibit a strong rebound, implying improved cost management, operational efficiency, or favorable market conditions. The economic profit margin recovery aligns with enhanced profitability relative to sales despite earlier challenges, highlighting resilience and effective strategic adjustments.