Walmart Inc. (NYSE:WMT)

The analysis of the financial indicators over the six-year period reveals various important trends.

Net Operating Profit After Taxes (NOPAT)

The NOPAT demonstrated a fluctuating trend. Starting at 18,200 million US dollars in 2020, it slightly decreased to 18,130 million in 2021. This was followed by a more pronounced decline in 2022 and 2023, reaching a low of 13,880 million. However, the NOPAT rebounded sharply in the last two years, reaching a peak of 22,003 million in 2025. This indicates a recovery and improvement in operational profitability in the most recent periods.

Cost of Capital

The cost of capital showed a steady upward trajectory throughout the period, rising from 8.88% in 2020 to 9.74% in 2025. The gradual increase suggests a rising required return by investors or lenders, potentially reflecting higher perceived risk or changes in market interest rates.

Invested Capital

Invested capital decreased consistently from 167,329 million US dollars in 2020 to 149,558 million in 2023. It then increased again in 2024 and 2025, ending at 161,279 million. The initial decline may indicate asset divestitures or capital efficiency improvements, while the subsequent rise suggests renewed investment or asset accumulation.

Economic Profit

Economic profit followed a pattern closely related to NOPAT performance. It started at a positive 3,336 million in 2020 but declined sharply in the following years, dropping to a negative figure of -92 million in 2023, indicating a period of value destruction. Thereafter, economic profit recovered strongly, reaching 6,294 million in 2025, reflecting an enhanced generation of returns above the cost of capital.

In summary, the data exhibits a period of operational and economic challenges around 2022 and 2023, followed by a marked recovery in profitability and value creation through 2024 and 2025. Despite a rising cost of capital, invested capital decreased initially before expanding again, which may align with strategic capital management responsive to market conditions. The positive trajectory in economic profit in the latter years strongly signifies improved financial performance and shareholder value generation.

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

Economic profit exhibited a fluctuating trend over the periods. It started at 3,336 million US dollars in early 2020, experienced a slight decline to 3,122 million in 2021, followed by a significant drop to 745 million in 2022. The figure turned negative in 2023, reaching -92 million, which indicates a period of economic loss. However, there was a strong recovery afterward, with economic profit increasing to 3,711 million in 2024 and further rising to 6,294 million in 2025, marking the highest value in the observed timeframe.

Invested Capital

Invested capital demonstrated a gradual decline from 167,329 million US dollars in 2020 to 149,558 million in 2023. After this reduction, invested capital rebounded somewhat, rising to 155,389 million in 2024 and further to 161,279 million in 2025. Despite these fluctuations, the overall invested capital remains lower in 2025 compared to the starting point in 2020, suggesting a period of capital optimization or asset reduction followed by a partial reinvestment.

Economic Spread Ratio

The economic spread ratio, expressed as a percentage, follows a similar pattern to economic profit. It began at 1.99% in 2020 and slightly decreased to 1.9% in 2021. A sharp decline ensued in 2022 to 0.48%, followed by a negative spread of -0.06% in 2023, indicating a period where the return on invested capital was less than the cost of capital. Positive momentum resumed with a pronounced increase to 2.39% in 2024 and an impressive rise to 3.9% in 2025, reflecting improved capital efficiency and profitability in the latter periods.

Net Sales

There is a consistent upward trend in net sales over the observed periods. Starting from $519,926 million in January 2020, net sales increased steadily each year, reaching $674,538 million by January 2025. This reflects overall growth in revenue generation for the company.

Economic Profit

The economic profit exhibits some volatility throughout the periods. Initially, it decreased from $3,336 million in January 2020 to $745 million in January 2022, showing a significant decline in value creation. This was followed by a slight negative economic profit of -$92 million in January 2023, indicating a period of economic loss. However, a strong recovery is noted with economic profit rising sharply to $3,711 million in January 2024 and further to $6,294 million in January 2025, surpassing initial levels.

Economic Profit Margin

The economic profit margin aligns with the trend in economic profit, starting at 0.64% in January 2020 and declining steadily to a negative margin of -0.02% in January 2023, indicating a temporary erosion of economic profitability. Following this, the margin improves to 0.58% in January 2024 and further increases to 0.93% by January 2025, signifying an enhanced ability to generate economic profit relative to sales.

Summary

Overall, despite consistent growth in net sales over the entire period, economic profit and its margin experienced fluctuations, including a period of negative economic profit in January 2023. The subsequent years demonstrate a robust recovery and improvement in economic profitability, suggesting effective management or operational efficiency gains following a challenging phase. The upward trend in economic profit and margin in the last two periods indicates strengthened value creation relative to revenue generation.