Walmart Inc. (NYSE:WMT)

Net Operating Profit After Taxes (NOPAT)

The NOPAT shows a fluctuating trend over the observed six-year period. Starting at 18,200 million USD in 2020, it remained relatively stable in 2021 at 18,130 million USD but then experienced a decline in 2022 and 2023, dropping to 15,307 million USD and 13,880 million USD respectively. However, there was a notable recovery in the following years, with a significant increase to 18,517 million USD in 2024 and further growth to 22,003 million USD in 2025.

Cost of Capital

The cost of capital exhibited a steady upward trend, increasing from 8.87% in 2020 to 9.72% by 2025. This incremental rise suggests a gradually higher required rate of return over the years, which could impact investment and valuation decisions.

Invested Capital

Invested capital experienced a downward trend from 167,329 million USD in 2020 to a low point of 149,558 million USD in 2023, indicating a reduction in capital deployment during this interval. However, in 2024 and 2025, the invested capital increased again to 155,389 million USD and 161,279 million USD respectively, demonstrating a phase of reinvestment or asset growth following the earlier contraction.

Economic Profit

Economic profit showed considerable volatility. It started at 3,365 million USD in 2020, then gradually declined to 774 million USD in 2022 and turned slightly negative at -64 million USD in 2023, highlighting a period where returns may not have covered capital costs. Subsequently, economic profit rebounded strongly, reaching 3,741 million USD in 2024 and surpassing previous levels with 6,326 million USD in 2025. This recovery aligns with the turnaround in NOPAT and increased invested capital, suggesting improved value creation in the later 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 demonstrates a volatile trend across the observed periods. Starting at a high of 3,365 million USD in early 2020, it slightly declined to 3,151 million USD in 2021. A significant drop occurred in 2022 to 774 million USD, followed by a negative economic profit of -64 million USD in 2023, indicating a loss in value creation during that year. Subsequently, there was a strong recovery with economic profit rising sharply to 3,741 million USD in 2024, and further accelerating to 6,326 million USD in 2025, the highest in the examined timeframe.

Invested Capital

The invested capital shows a general decreasing trend initially, falling from 167,329 million USD in early 2020 to 149,558 million USD by 2023. After this trough, a reversal is observed with invested capital increasing to 155,389 million USD in 2024 and continuing upwards to 161,279 million USD in 2025. This indicates fluctuations in asset base or capital deployment, with a reduction phase followed by renewed investment.

Economic Spread Ratio

The economic spread ratio mirrors the pattern seen in economic profit, with values declining from 2.01% in 2020 to 1.92% in 2021, then sharply dropping to 0.5% in 2022 and turning slightly negative to -0.04% in 2023. This negative ratio signifies a period where returns did not cover the cost of capital. The ratio then recovers robustly to 2.41% in 2024 and further improves to 3.92% in 2025, indicating enhanced efficiency in capital use and value creation over the last two years.

Net Sales

Net sales demonstrated a consistent upward trend over the periods analyzed. Starting at approximately $519.9 billion in 2020, net sales increased each year, reaching $674.5 billion by 2025. This steady growth reflects a positive revenue trajectory spanning the six-year timeframe.

Economic Profit

The economic profit exhibited notable volatility across the years. It began at $3.365 billion in 2020 and gradually declined to $774 million by 2022, followed by a negative economic profit of $64 million in 2023, indicating a temporary period of economic loss. Subsequently, economic profit rebounded strongly to $3.741 billion in 2024 and further increased to $6.326 billion in 2025, showing significant recovery and improvement in value creation.

Economic Profit Margin

The economic profit margin mirrored the fluctuations observed in economic profit. It started at 0.65% in 2020, decreased each year to a minimal 0.14% by 2022, and turned slightly negative (-0.01%) in 2023, reflecting a challenging year in terms of profitability relative to sales. Following this dip, the margin improved to 0.58% in 2024 and further increased to 0.94% in 2025, indicating enhanced efficiency and profitability in generating economic profit from net sales.

Summary

Overall, while net sales exhibited steady and consistent growth, both economic profit and its margin experienced significant volatility, including a period of economic loss in 2023. However, these profitability metrics demonstrated strong recovery and improvement in the final two years analyzed. The data suggests challenges were faced around 2022-2023 but were effectively addressed, resulting in enhanced value generation and margin expansion by 2025.