Walt Disney Co. (NYSE:DIS)

The analysis of the financial data reveals several notable trends over the observed periods, specifically in net operating profit after taxes (NOPAT), cost of capital, invested capital, and economic profit.

Net Operating Profit After Taxes (NOPAT)

The NOPAT values exhibit significant fluctuations. Starting from a positive figure of $16,211 million in 2019, there is a sharp decline to a negative value of -$2,053 million in 2020, indicating a substantial operational setback, likely influenced by extraordinary circumstances during that period. Following 2020, the NOPAT recovers to positive territory, reaching $2,215 million in 2021 and further increasing to $6,699 million in 2022. However, in 2023, it decreases again to $3,406 million before rising to $6,260 million in 2024. This shows a pattern of recovery with some volatility in the recent years.

Cost of Capital

The cost of capital remains relatively stable throughout the years, ranging between 14.61% and 15.29%. The highest cost is observed in 2019 at 15.29%, followed by a slight decrease and fluctuating marginally around 14.6% to 15.07% in subsequent years. This stability suggests a consistent expectation for returns by investors and creditors despite operational challenges.

Invested Capital

Invested capital shows a slight upward trend initially, increasing from $169,178 million in 2019 to a peak of $174,594 million in 2020. Following this peak, the value remains relatively steady around $173,000 million through 2023 with a slight decrease to $166,066 million in 2024. This indicates relatively stable investment levels with a recent modest reduction.

Economic Profit

Economic profit remains negative throughout all periods, suggesting the company has not been generating returns above its cost of capital. The lowest economic profit occurs in 2020 at -$27,668 million, which mirrors the exceptional downturn in NOPAT that year. Although the negative values show some improvement post-2020, they remain considerable, fluctuating between approximately -$18,000 million and -$22,000 million. This persistent negative economic profit implies challenges in value creation over the full time horizon.

Overall, the data indicates that while operational profitability (NOPAT) experienced recovery post-2020’s sharp decline, the company consistently struggled to generate economic profit above its cost of capital. The invested capital remained relatively stable with a minor decline in the latest period, and the cost of capital did not experience significant changes. These factors contribute to a financial profile marked by challenges in creating economic value despite operational improvements.

Net Income (Loss) Attributable to The Walt Disney Company

The net income demonstrates significant variability over the analyzed years. Initially, there was a strong positive net income of 11,054 million US dollars in the fiscal year ending September 28, 2019. However, this was followed by a substantial decline resulting in a net loss of 2,864 million US dollars in the fiscal year ending October 3, 2020. Recovery began in the subsequent years, with net income returning to positive figures of 1,995 million US dollars in 2021, increasing to 3,145 million US dollars in 2022. There was a slight decline to 2,354 million US dollars in 2023, followed by a pronounced increase to 4,972 million US dollars in 2024. Overall, the net income figures show a sharp dip likely attributable to extraordinary or cyclical factors around 2020, with a clear recovery trend in the subsequent periods.

Net Operating Profit After Taxes (NOPAT)

The NOPAT figures follow a pattern similar to net income, reflecting operational profitability after tax adjustments. Starting at a robust 16,211 million US dollars in 2019, there was a notable drop to -2,053 million US dollars in 2020, indicating operational losses during that period. A gradual recovery is observed in the following years, with an increase to 2,215 million US dollars in 2021, and a significant rise to 6,699 million US dollars in 2022. The year 2023 saw a decrease to 3,406 million US dollars, but this was followed by another increase to 6,260 million US dollars in 2024. These fluctuations suggest a period of operational challenges in 2020, followed by a strong recovery and intermittent volatility in the subsequent years.

Summary of Trends

Both net income and NOPAT experienced a pronounced decline in the fiscal year 2020, reflecting a challenging environment for the company during that period. The figures suggest a recovery trajectory beginning in 2021, with steady improvements through 2022 and 2024. Despite some fluctuations in 2023, the overall trend is positive, indicating enhanced profitability and operational efficiency over the longer term. The data points to resilience and a capacity to recover from significant setbacks, with profitability levels approaching or exceeding pre-2020 values by 2024.

The data reveals notable fluctuations in both income tax expenses on income from continuing operations and cash operating taxes over the periods analyzed.

Income Tax Expense on Income from Continuing Operations

This metric shows a significant decline from 3,031 million US dollars in 2019 to a low of 25 million in 2021, indicating a substantial reduction in tax expenses relative to income during that year. However, there is an upward trend following 2021, rising to 1,732 million in 2022, then slightly decreasing to 1,379 million in 2023, before increasing again to 1,796 million in 2024. Despite these fluctuations, the 2024 figure remains lower than the 2019 value but is substantially higher than the minimal level seen in 2021.

Cash Operating Taxes

Cash operating taxes exhibit a consistent upward trend over the entire period, starting at 1,297 million US dollars in 2019 and increasing steadily each year. The rise becomes more pronounced from 2022 onwards, with an increase from 1,891 million in 2022 to 3,100 million in 2023, followed by a slight decrease to 2,982 million in 2024. Overall, cash operating taxes more than doubled from 2019 to their peak in 2023, indicating increased tax payments in operational cash flows.

The contrasting trends between income tax expense and cash operating taxes suggest differing impacts on accounting income versus cash flow basis taxes, with income tax expense experiencing volatility, while cash operating taxes show a clear upward pattern until 2023, stabilizing slightly in the latest period.

Total reported debt & leases

The total reported debt and leases exhibited an overall decreasing trend from 2019 to 2024. Starting at $50,841 million in 2019, the amount increased to a peak of $62,323 million in 2020, likely reflecting heightened borrowing or leasing activities during that year. Subsequently, there was a consistent decline through 2024, culminating in $49,517 million, which is slightly below the 2019 level. This pattern indicates a strategic reduction in debt and lease obligations following the 2020 peak.

Total Disney Shareholder’s equity

Shareholder’s equity showed a generally upward trajectory over the period. Beginning at $88,877 million in 2019, equity decreased to $83,583 million in 2020, which might be associated with the elevated debt levels that year. From 2020 onward, equity increased steadily, reaching $100,696 million by 2024. This growth suggests an improvement in retained earnings or additional equity infusions, leading to stronger financial stability and increased net asset value.

Invested capital

Invested capital remained relatively stable throughout the period but demonstrated a slight overall decline from 2019 through 2024. Starting at $169,178 million in 2019, the value peaked slightly in 2020 at $174,594 million and fluctuated modestly thereafter. By 2024, invested capital was recorded at $166,066 million, indicating a minor contraction of about 2% from the 2019 figure. This stability implies steady investment levels in the company's operational assets despite fluctuations in debt and equity.

Summary

The data reflects a period of financial adjustment characterized by a peak in debt and leases in 2020, followed by a systematic reduction through 2024. Concurrently, shareholder equity experienced a dip in 2020 but then strengthened significantly, surpassing the pre-2020 levels by 2024. Invested capital remained mostly stable, suggesting consistent asset base maintenance. Overall, these trends suggest an emphasis on deleveraging and improving equity position while maintaining steady investment in capital assets over the analyzed timeframe.

Economic Profit

The economic profit demonstrates a consistently negative trend over the six-year period, indicating ongoing value destruction. Starting at -9,663 million US dollars in 2019, the loss deepens significantly to -27,668 million in 2020, reflecting a sharp deterioration. Although there is some improvement in the following years, the economic profit remains substantially negative, fluctuating between -18,715 million and -22,429 million from 2022 to 2024. This pattern suggests persistent challenges in generating returns above the cost of capital.

Invested Capital

Invested capital shows relative stability with minor fluctuations throughout the observed period. The amount begins at 169,178 million US dollars in 2019 and experiences a slight increase to a peak of 174,594 million in 2020. Subsequently, it remains close to this level until 2023, before decreasing to 166,066 million in 2024. The modest decline in the final year may indicate asset disposals, lower investments, or asset revaluation.

Economic Spread Ratio

The economic spread ratio, which reflects the spread between return on invested capital and cost of capital, remains negative for all years reviewed. The ratio deteriorates sharply from -5.71% in 2019 to a low of -15.85% in 2020, consistent with the sharp reduction in economic profit observed in the same year. Although there is a gradual recovery following 2020, the ratio remains significantly negative, hovering between -10.76% and -13.59%. This persistent negative spread underscores the company's inability to generate sufficient returns relative to its cost of capital over the period.

Overall Analysis

The data indicates a firm facing continuous economic challenges, as evidenced by sustained negative economic profit and economic spread ratio over the period analyzed. The invested capital has been relatively stable, but the returns on this capital have not been sufficient to overcome associated costs. The sharp downturn in 2020 is notable, with partial recovery thereafter, yet not enough to achieve positive economic value. Strategic measures may be required to enhance capital efficiency and improve profitability.

The financial data for the analyzed periods reveals several key trends concerning economic profit, adjusted revenues, and economic profit margin.

Economic Profit

The economic profit demonstrates a negative value throughout all reported years, indicating a consistent failure to generate surplus profit over the cost of capital. The loss peaked in the year ending October 3, 2020, at -27,668 million US dollars. Subsequently, the economic loss moderated but remained substantial, fluctuating between approximately -18,700 and -23,400 million US dollars through to the most recent period ending September 28, 2024. This pattern suggests persistent challenges in achieving economic profitability alongside notable volatility.

Adjusted Revenues

Adjusted revenues exhibit an overall upward trajectory from 70,704 million US dollars in 2019 to 91,261 million US dollars in 2024. After an initial decline in 2020, revenues recovered and increased significantly in 2022 and continued modest growth thereafter. The steady increase in revenues in the last three years indicates strengthening top-line performance despite ongoing negative economic profits.

Economic Profit Margin

The economic profit margin has consistently been negative, reflecting the negative economic profit. The margin worsened sharply in 2020, reaching -42.62%. Since then, it improved gradually but remained deeply negative, settling at -20.56% in 2024. This trend suggests some enhancement in operational or capital efficiency, though not sufficient to reach profitability from an economic perspective.

In summary, while adjusted revenues have shown a positive recovery and growth trend after 2020, economic profitability remains elusive with ongoing significant losses. The improvement in economic profit margin suggests some operational improvement, but continued negative margins indicate structural challenges that have not yet been resolved as of the latest period.