Walt Disney Co. (NYSE:DIS)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes experienced significant volatility over the analyzed period. The value started at a high of 16,211 million USD in 2019, followed by a steep decline to a negative 2,053 million USD in 2020. Thereafter, a gradual recovery is observed with NOPAT rising to 2,215 million USD in 2021 and continuing to increase to 6,699 million USD in 2022. A decline occurred again in 2023, dropping to 3,406 million USD, before improving to 6,260 million USD in 2024. Overall, the trend indicates a substantial initial impact, likely due to extraordinary circumstances in 2020, with a partial recovery in subsequent years but with fluctuations.

Cost of Capital

The cost of capital remained relatively stable throughout the period, fluctuating slightly within a narrow range between 14.51% and 15.19%. The highest value was recorded in 2019 at 15.19%, and the lowest in 2022 at 14.51%, ending close to 15% in 2024. This stability suggests consistent expectations regarding the company's risk and financing costs over the years.

Invested Capital

Invested capital showed a generally stable trend with minor fluctuations. It increased modestly from 169,178 million USD in 2019 to 174,594 million USD in 2020, then slightly decreased year-over-year to 166,066 million USD by 2024. This indicates a relatively steady investment base, with a slight contraction in the most recent period, possibly reflecting divestitures or efficiency improvements.

Economic Profit

Economic profit remained negative throughout the period, indicating that the returns on invested capital did not exceed the cost of capital. The negative economic profit deepened sharply from -9,492 million USD in 2019 to -27,499 million USD in 2020, implying significant value destruction in that year. Although there was some improvement after 2020, economic profit remained strongly negative, ranging between -18,549 million USD and -23,328 million USD in the following years, with a slight recovery to -18,604 million USD in 2024. This persistent negative economic profit highlights ongoing challenges in generating returns above 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 has consistently been negative throughout the analyzed periods, indicating that the company incurred economic losses each year. The lowest economic profit was recorded in the fiscal year ending October 3, 2020, at -27,499 million US dollars. Following this, there was a gradual improvement observed over the next few years, with values rising to -23,328 million in 2021 and further to -18,549 million in 2022. However, in 2023, a decline occurred again to -22,262 million before a subsequent improvement to -18,604 million in 2024. Overall, despite fluctuations, the economic profit remained substantially negative over the entire period.

Invested Capital

The invested capital remained relatively stable across the years, ranging from a low of 166,066 million US dollars in 2024 to a high of 174,594 million US dollars in 2020. After an increase from 169,178 million in 2019 to 174,594 million in 2020, it experienced minor fluctuations but generally trended slightly downward, particularly noticeable in the last recorded year, 2024, showing a reduction compared to previous years.

Economic Spread Ratio

The economic spread ratio remained negative throughout the entire period, signaling that the company's returns did not exceed the cost of capital. The most pronounced negative value was observed in 2020 at -15.75%. Following this, there was an improvement trend diminishing the magnitude of the negative spread to -10.66% in 2022. However, the ratio deteriorated again in 2023 to -12.81% before a marginal recovery to -11.2% in 2024. The fluctuations suggest ongoing challenges in maintaining returns above cost of capital.

Summary

The company consistently generated negative economic profits, with the worst performance in 2020, reflecting substantial economic losses. Despite relatively stable invested capital, the economic spread ratio remained negative, indicating persistent challenges in creating value above the cost of capital. Some improvements were noted post-2020, but the financial performance still reflects a struggle to achieve positive economic profitability as of the most recent year analyzed.

The financial data presents a mixed performance picture over the examined periods, with significant fluctuations observed in key profitability metrics alongside generally increasing revenue figures.

Adjusted Revenues

There is a clear upward trend in adjusted revenues from 2019 to 2024, starting at approximately $70.7 billion and increasing to about $91.3 billion. This represents consistent growth over the six-year span, with a notable acceleration in revenue from 2021 onwards. Such a trend suggests improving sales or service volumes and potentially effective pricing strategies or market expansion.

Economic Profit

Economic profit remains negative throughout all periods, reflecting consistent economic losses. Although the economic profit fluctuates, there is an improvement trend from the substantial loss peak in 2020 of about -$27.5 billion. By 2024, the loss decreases to approximately -$18.6 billion, which, while still significant, indicates some progress in mitigating losses compared to the trough years. However, these losses point to challenges in generating returns exceeding the cost of capital.

Economic Profit Margin

The economic profit margin mirrors the pattern of economic profit, consistently negative but improving over time. Starting at -13.42% in 2019, it sharply worsens in 2020 to -42.36%, then partially recovers to around -20.39% by 2024. This pattern suggests that while operational efficiency or capital utilization may have been severely impacted around 2020, possibly due to external factors, recovery efforts have reduced the negative margin substantially, though it remains below breakeven.

Overall, the data illustrates a business that is growing its revenue base but continues to struggle with achieving positive economic profitability. The reduction in losses and improvement in economic profit margin in recent years are encouraging signs, yet persistent negative economic profit underscores the need for further strategic or operational adjustments to enhance capital returns.