Walmart Inc. (NYSE:WMT)

Net Operating Profit After Taxes (NOPAT)

The NOPAT values demonstrate a generally stable yet fluctuating trend across the periods. Starting at 18,200 million USD in 2020, the figure slightly decreased to 18,130 million USD in 2021, followed by a more significant decline to 15,307 million USD in 2022 and 13,880 million USD in 2023. However, a notable recovery occurs thereafter, with NOPAT increasing to 18,517 million USD in 2024 and further to 22,003 million USD in 2025, surpassing the initial value in 2020.

Cost of Capital

The cost of capital shows a consistent upward trend over the evaluated periods. It begins at 8.98% in 2020 and steadily increases each year, reaching 9.85% in 2025. This gradual rise suggests increasing capital costs or perceived risk, which could impact investment and valuation decisions.

Invested Capital

Invested capital reveals a declining trend from 167,329 million USD in 2020 down to 149,558 million USD in 2023. This reduction may indicate asset disposals, efficiency improvements, or capital optimization efforts. From 2023 onwards, invested capital shows a moderate increment, rising to 155,389 million USD in 2024 and 161,279 million USD in 2025, possibly reflecting renewed investment or growth initiatives.

Economic Profit

Economic profit fluctuates significantly over the periods. It starts at a robust 3,176 million USD in 2020 and then slightly decreases to 2,957 million USD in 2021. A sharp decline follows in 2022, with economic profit dropping to 583 million USD and turning negative in 2023 at -247 million USD, indicating value destruction during that year. Subsequently, economic profit rebounds strongly to 3,545 million USD in 2024 and reaches a peak of 6,116 million USD in 2025, signaling significant value creation in the latter periods.

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 shows volatility over the six-year period. It started at a high level of $3,176 million in 2020, slightly decreased to $2,957 million in 2021, then dramatically dropped to $583 million in 2022. In 2023, economic profit turned negative, recording a loss of $247 million, but rebounded strongly in the subsequent years to $3,545 million in 2024 and further increased to $6,116 million in 2025.

Invested Capital

Invested capital exhibits a gradual declining trend from $167,329 million in 2020 to a low of $149,558 million in 2023. This decrease was followed by a modest recovery in 2024 and 2025, reaching $161,279 million by the end of the observed period, though still below the initial levels in 2020.

Economic Spread Ratio

The economic spread ratio mirrors the trend seen in economic profit, starting relatively strong at 1.9% in 2020 and slightly declining to 1.8% in 2021. It then dropped sharply to 0.37% in 2022 and turned negative at -0.17% in 2023, indicating a period where returns on invested capital were less than the cost of capital. Significant improvement occurred afterward, with the ratio rising to 2.28% in 2024 and reaching a peak of 3.79% in 2025.

Overall Analysis

Over the six years, the company experienced a challenging phase around 2022-2023, characterized by reduced economic profit and returns below the cost of capital, as indicated by negative economic spread. However, strong recovery is evident in the latest years, with economic profit and spread ratio rising substantially. Invested capital's reduction and subsequent partial recovery suggest adjustments in the asset base which may have contributed to the financial performance trends observed.

Economic Profit

The economic profit exhibited considerable volatility over the six-year period. Starting at 3,176 million US dollars in 2020, it declined slightly to 2,957 million in 2021 and sharply dropped to 583 million in 2022. The company experienced a negative economic profit of -247 million in 2023, indicating a period of economic loss. However, a strong recovery followed, with economic profit rising substantially to 3,545 million in 2024 and further increasing to 6,116 million in 2025. This suggests a notable improvement in value creation capacity in the latter years.

Net Sales

Net sales showed a consistent upward trend throughout the six years. Beginning at 519,926 million US dollars in 2020, sales increased steadily each year, reaching 674,538 million by 2025. The growth was gradual but persistent, reflecting continuous revenue expansion without any periods of decline.

Economic Profit Margin

The economic profit margin closely mirrored the trend in economic profit but with more pronounced fluctuations relative to net sales. Starting at 0.61% in 2020, it slightly decreased to 0.53% in 2021 and dropped sharply to 0.10% in 2022. The margin turned negative at -0.04% in 2023, indicating a scenario where economic losses were incurred relative to sales. However, the margin rebounded to 0.55% in 2024 and improved further to 0.91% in 2025, demonstrating enhanced efficiency in generating economic profit from sales in the most recent years.

Summary

Overall, the data reveal a scenario of steady sales growth accompanied by significant variations in economic profitability. While sales rose consistently, the company's ability to convert those sales into economic profit was challenged between 2022 and 2023, even turning negative for one year. The substantial recovery in economic profit and its margin in the last two years suggests effective strategic or operational improvements that enhanced value generation despite persistent sales growth.