Walt Disney Co. (NYSE:DIS)

Net Operating Profit After Taxes (NOPAT)

The NOPAT shows significant fluctuations over the years. In 2019, there was a strong profit of 16,211 million USD, which sharply declined to a negative figure of -2,053 million USD in 2020. This was followed by a modest recovery to 2,215 million USD in 2021 and further improvement in 2022 reaching 6,699 million USD. However, the profit decreased again in 2023 to 3,406 million USD before rising once more to 6,260 million USD in 2024. Overall, the trend indicates high volatility with partial recovery after a significant downturn in 2020.

Cost of Capital

The cost of capital slightly decreased from 15.43% in 2019 to a low of 14.74% in 2022, before increasing again to 15.2% in 2024. The changes are relatively marginal, suggesting a stable but slightly fluctuating cost environment for capital investment over the period.

Invested Capital

The invested capital remained mostly stable throughout the years, starting from 169,178 million USD in 2019, peaking slightly at 174,594 million USD in 2020, and generally hovering around the 172,000-174,000 million USD range through 2023. In 2024, it decreased to 166,066 million USD. This indicates that the company maintained a large, relatively consistent asset base with a slight reduction in the most recent year.

Economic Profit

Economic profit was negative in all years, indicating that the company's returns did not exceed the cost of capital during this period. The largest loss occurred in 2020 at -27,895 million USD, aligning with the significant drop in NOPAT. Although economic profit improved after 2020, it remained deeply negative, with figures such as -23,727 million USD in 2021, -18,937 million USD in 2022, fluctuating to -22,653 million USD in 2023 and slightly better at -18,985 million USD in 2024. The persistent negative economic profit highlights ongoing challenges in generating sufficient returns over the cost of capital.

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 shows a persistent negative trend throughout the period under review. It deteriorated drastically from -9,891 million US dollars in 2019 to a low point of -27,895 million US dollars in 2020. Following 2020, there has been some level of recovery, but economic profit remains significantly negative, fluctuating between approximately -18,937 million and -22,653 million US dollars up to 2024. The company has not achieved positive economic profit in any of these years, indicating challenges in generating returns above its cost of capital.

Invested Capital

Invested capital remained relatively stable over the years, with a slight increase from 169,178 million US dollars in 2019 to peak around 174,594 million in 2020 and maintaining around this level through 2023. There was a noticeable decline in 2024, dropping to 166,066 million US dollars. This reduction in invested capital in the most recent year could reflect divestments, asset impairments, or capital management adjustments.

Economic Spread Ratio

The economic spread ratio consistently remains negative, mirroring the trend in economic profit. It declined sharply from -5.85% in 2019 to -15.98% in 2020, signaling a significant deterioration in the company's ability to generate returns above its cost of capital that year. While there has been an improvement since 2020, with the spread narrowing to -11.43% in 2024, it has not returned to positive territory, indicating ongoing challenges in operational efficiency or profitability relative to capital costs.

Overall Insights

The financial indicators suggest that the company has been unable to generate economic profits during the period analyzed, with the worst performance observed in 2020, likely influenced by external or internal adverse conditions. Despite stable invested capital levels, the inability to achieve a positive economic spread ratio indicates that returns have consistently fallen short of capital costs. Efforts post-2020 appear to moderate losses, but profitability has not fully recovered.

Adjusted Revenues

The adjusted revenues demonstrate an overall upward trend over the analyzed periods. Beginning at 70,704 million US dollars in 2019, revenues experienced a decline in 2020 to 64,920 million US dollars, likely reflecting external adverse conditions. However, from 2020 onwards, a steady recovery and growth are observed, with revenues reaching 91,261 million US dollars by 2024. This indicates a significant rebound and expansion in the company's revenue-generating capacity.

Economic Profit

Economic profit values throughout the period are consistently negative, indicating that the company has not generated economic profits during these years. The loss peaked in 2020 at -27,895 million US dollars, followed by a decrease in the magnitude of losses in 2022 and 2024 compared to earlier years. Despite slight fluctuations, the economic profit remains significantly below zero, suggesting persistent challenges in achieving value creation above the cost of capital.

Economic Profit Margin

The economic profit margin follows a similar pattern to economic profit, remaining negative in all periods. The most severe contraction occurred in 2020, reaching -42.97%, which aligns with the peak economic profit loss. Subsequent years show a gradual improvement in margin, rising to -20.8% by 2024, reflecting incremental progress in profitability relative to revenues. Nonetheless, margins remain negative, indicating ongoing inefficiencies or cost pressures.

Overall Trends and Insights

While adjusted revenues exhibit strong recovery and growth post-2020, the economic profit and profit margin remain negative across all periods, albeit improving from the worst levels. This divergence suggests that despite increasing top-line performance, the company faces continued difficulties in converting revenues into positive economic value. Efforts to address cost structures, capital efficiency, or other profitability drivers may be necessary to achieve sustained economic profit.