Economic Value Added (EVA)
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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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Expedia Group Inc. pages available for free this week:
- Income Statement
- Balance Sheet: Assets
- Cash Flow Statement
- Common-Size Income Statement
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Geographic Areas
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2005
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Economic Profit
Expedia Group Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial data reveals several notable trends and dynamics over the five-year period from 2017 to 2021. There is significant variability in the key performance indicators that reflect both operational efficiency and capital utilization.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT shows a general upward trend from 1026 million USD in 2017 to a peak of 1922 million USD in 2019, indicating improving operational profitability during the initial years. However, 2020 experiences a substantial decline into negative territory, showing a loss of 5503 million USD. This sharp downturn likely reflects a significant operational challenge or external shock impacting performance. Recovery is evident in 2021, with NOPAT returning to a positive 2614 million USD, surpassing all prior positive levels except for the 2019 peak.
- Cost of Capital
- The cost of capital has remained relatively stable, fluctuating moderately between 15.46% and 17.92%. The lowest point was in 2020 at 15.46%, coinciding with the NOPAT decline, while the highest was 17.92% in 2018. The steady cost of capital suggests that the company’s market and financing risk environment was relatively consistent across the period despite operational volatility.
- Invested Capital
- Invested capital steadily increased from 14039 million USD in 2017 to 17498 million USD in 2021. This trend reflects continual investment or capital allocation into the business over time, with a modest dip in 2020 but overall growth throughout the period. The increase in capital base, especially amidst fluctuating profitability, may suggest strategic initiatives or expansion efforts.
- Economic Profit
- Economic profit remains negative throughout the entire period, indicating that the company’s returns did not exceed its cost of capital at any point. Despite the improving NOPAT prior to 2020, economic profit improved from -1334 million USD in 2017 to a lower negative amount of -784 million USD in 2019 but deteriorated sharply to -7939 million USD in 2020, mirroring the NOPAT collapse. The recovery in 2021 to -326 million USD shows progress but still indicates an economic loss relative to the overall cost of capital.
Overall, the data indicates a company experiencing growth in profitability and capital over the initial three years, followed by significant operational and economic challenges in 2020. The rebound in 2021 exhibits resilience, although the persistent negative economic profit suggests ongoing challenges in generating returns above the cost of capital. The steady cost of capital amidst these fluctuations implies consistent financial risk perceptions from investors or lenders throughout the period.
Net Operating Profit after Taxes (NOPAT)
Expedia Group Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for expected credit losses.
3 Addition of increase (decrease) in deferred merchant bookings and deferred revenue.
4 Addition of increase (decrease) in restructuring and related reorganization accrued liability.
5 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to Expedia Group, Inc..
6 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
8 Addition of after taxes interest expense to net income (loss) attributable to Expedia Group, Inc..
9 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
10 Elimination of after taxes investment income.
The financial data reveals significant fluctuations in profitability over the analyzed periods.
- Net Income (Loss) Attributable to Expedia Group, Inc.
- The company experienced positive net income from 2017 through 2019, with values steadily increasing from 378 million USD in 2017 to 565 million USD in 2019. In 2020, there was a sharp and substantial loss of 2,612 million USD, indicating a major adverse impact on profitability. The net income slightly recovered in 2021, recording a marginal profit of 12 million USD, which suggests a fragile rebound but still far below pre-2020 levels.
- Net Operating Profit After Taxes (NOPAT)
- This metric exhibits a similar trend to net income, with continuous growth from 1,026 million USD in 2017 to 1,922 million USD in 2019. The year 2020 marked a deep negative NOPAT of 5,503 million USD, underscoring the operational difficulties faced during this period. In 2021, there was a notable improvement with NOPAT returning to a positive figure of 2,614 million USD, surpassing pre-pandemic levels, which may reflect operational recovery and enhanced efficiency or cost management.
Overall, the data illustrates strong growth in profitability through 2019, a severe downturn in 2020 presumably linked to extraordinary circumstances, followed by partial to full recovery across key profit measures in 2021. The divergence in magnitude of loss between net income and NOPAT in 2020 highlights the scale of operational and possibly non-operational challenges during that year.
Cash Operating Taxes
Expedia Group Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The analysis of the provided financial data indicates noteworthy fluctuations in the income tax expense (benefit) and cash operating taxes over the observed five-year period.
- Income Tax Expense (Benefit)
- The income tax expense exhibits a rising trend from 2017 through 2019, increasing from 45 million USD to 203 million USD. However, this trend reverses strongly in 2020, with the figure turning negative to -423 million USD, indicating a tax benefit rather than an expense. In 2021, the amount remains negative but with a reduced benefit of -53 million USD. This significant shift in 2020 and 2021 reflects either substantial tax credits, loss carrybacks, or other tax relief measures impacting the income tax recorded.
- Cash Operating Taxes
- Cash operating taxes increase sharply from 212 million USD in 2017 to 427 million USD in 2018, followed by a decline to 323 million USD in 2019. The downward trend continues in 2020, dropping to 142 million USD, and then slightly recovers to 167 million USD in 2021. This pattern suggests a peak in cash outflows related to taxes in 2018, with subsequent moderation likely due to operational changes or tax planning strategies.
Overall, the data reveals contrasting movements between reported income tax expense and actual cash tax payments, especially notable in 2020 when the income tax expense turns into a substantial benefit while cash taxes paid decrease markedly. This divergence may indicate changes in accounting treatment or timing differences between tax expense recognition and cash tax payments.
Invested Capital
Expedia Group Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred merchant bookings and deferred revenue.
5 Addition of restructuring and related reorganization accrued liability.
6 Addition of equity equivalents to total Expedia Group, Inc. stockholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of projects in progress.
9 Subtraction of investments.
The presented financial data reveals several notable trends over the five-year period from 2017 to 2021.
- Total Reported Debt & Leases
- There is an overall increasing trend in total reported debt and leases, rising from $4,941 million in 2017 to $8,887 million by the end of 2021. Notably, the increase between 2019 ($5,589 million) and 2020 ($8,855 million) is substantial, indicating a significant rise in leverage during that period, which then stabilizes into 2021.
- Total Stockholders’ Equity
- Total stockholders' equity shows a declining trend over the same period. Starting at $4,522 million in 2017, it decreases somewhat gradually to $3,967 million in 2019, followed by a sharper decline to $2,532 million in 2020 and then further to $2,057 million in 2021. This decreasing equity trend suggests potential erosion of shareholder value or increased liabilities relative to assets.
- Invested Capital
- Invested capital remains relatively steady between 2017 and 2020, fluctuating mildly from $14,039 million in 2017 to $15,765 million in 2020. However, a noticeable increase occurs in 2021, reaching $17,498 million. This rise may reflect accumulated investments, retained earnings, or other capital inputs despite the reduction in equity.
In summary, the financial structure indicates rising debt levels alongside falling equity, which could imply increased financial risk or strategic leveraging. The increase in invested capital alongside these changes indicates ongoing commitments to assets or operations. These trends warrant further investigation into the underlying causes, such as capital expenditures, income performance, or financing activities, to comprehensively assess financial health and risk exposure.
Cost of Capital
Expedia Group Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Series A Preferred Stock | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Series A Preferred Stock | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Series A Preferred Stock | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Series A Preferred Stock | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Series A Preferred Stock | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2017-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Expedia Group Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit shows a consistent negative trend throughout the observed period. Starting at -1,334 million US dollars in 2017, it slightly improved to -1,236 million in 2018 and further reduced to -784 million in 2019. However, there was a significant deterioration in 2020, with economic profit plummeting to -7,939 million, followed by a recovery to -326 million in 2021. This indicates substantial losses that peaked during 2020 but were partly mitigated in the following year.
- Invested Capital
- The invested capital exhibits a generally increasing trend over the years. It rose steadily from 14,039 million US dollars in 2017 to 16,161 million in 2019. There was a slight decline in 2020 to 15,765 million, which may be related to the extraordinary economic conditions during that year. In 2021, the invested capital increased again to reach 17,498 million US dollars, marking the highest level in the period observed.
- Economic Spread Ratio
- The economic spread ratio remains negative throughout the period, reflecting an economic spread that does not generate value above the cost of capital. It improved from -9.51% in 2017 to -4.85% in 2019. In 2020, it sharply deteriorated to -50.36%, indicating a severe decline in economic efficiency, presumably due to extraordinary external factors. By 2021, the ratio improved significantly to -1.86%, approaching a near breakeven level but still negative.
- Overall Insights
- The data reveals a company experiencing ongoing economic challenges, with losses evident in economic profit across all years. The peak negative impact in 2020 corresponds with a sharp drop in economic spread ratio and a temporary decrease in invested capital. The gradual recovery in 2021, as observed in all three metrics, suggests resilience and possible operational improvements or favorable external conditions. Nevertheless, the failure to achieve positive economic profit and spread indicates continued concerns regarding value creation.
Economic Profit Margin
Expedia Group Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in deferred merchant bookings and deferred revenue | ||||||
| Adjusted revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Economic profit. See details »
2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
The annual financial data reveals significant fluctuations in the company's economic profit, adjusted revenue, and economic profit margin over the analyzed period.
- Adjusted Revenue
- The adjusted revenue showed a consistent upward trend from 2017 to 2019, increasing from $10,705 million in 2017 to $13,376 million in 2019. However, in 2020, there was a sharp decline to $2,478 million, representing a significant contraction, likely due to external adverse conditions impacting revenue generation. The revenue partially recovered in 2021 to $11,173 million, though it did not reach pre-2020 levels.
- Economic Profit
- The economic profit consistently exhibited negative values throughout the period, indicating the company operated at an economic loss each year. From 2017 to 2019, losses decreased from -$1,334 million to -$784 million, showing some improvement. In 2020, the economic profit deteriorated drastically to -$7,939 million, corresponding with the sharp revenue decline, indicating significantly reduced profitability or increased costs. In 2021, the economic loss improved substantially to -$326 million, suggesting a recovery in operational efficiency or cost control.
- Economic Profit Margin
- The economic profit margin followed a pattern consistent with the economic profit figures, remaining negative throughout the period. The margin improved from -12.47% in 2017 to -5.86% in 2019, indicating improved profitability relative to revenue. In 2020, the margin plummeted to an extreme -320.39%, reflecting the severe economic loss and revenue drop that year. The margin improved significantly in 2021 to -2.92%, which, although still negative, shows recovery towards a less loss-making position.
Overall, the data suggests the company experienced a period of growth from 2017 through 2019, followed by severe operational and economic challenges in 2020 causing sharp declines in revenue and profitability. By 2021, the company showed notable recovery signs, with improved adjusted revenue and economic profit margin, although profitability remained below breakeven levels.