Lam Research Corp. (NASDAQ:LRCX)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes showed a general upward trend from 2020 to 2022, increasing from approximately 2.4 million to over 5.6 million USD. However, this was followed by a significant decline in the subsequent two years, with a drop to around 3.25 million USD in 2024. In 2025, the NOPAT rebounded strongly, reaching approximately 6.1 million USD, the highest level in the period under review.

Cost of Capital

The cost of capital steadily increased over the analyzed period, rising from 18.06% in 2020 to 19.54% in 2025. This gradual increase suggests a rising hurdle rate for investments, which could reflect changes in market conditions or the company's risk profile.

Invested Capital

Invested capital demonstrated a consistent upward trend over the years, growing from roughly 11.8 million USD in 2020 to 16.4 million USD in 2025. This reflects an ongoing commitment to investment, potentially to support growth initiatives or operational capacity expansions.

Economic Profit

Economic profit experienced notable fluctuations during the period. After a positive but modest start of approximately 272 thousand USD in 2020, it rose sharply to over 3 million USD in 2022. This was followed by a decline to around 386 thousand USD in 2024, indicating a period of reduced value creation. By 2025, economic profit increased again to nearly 2.9 million USD, suggesting a recovery in value generation despite the higher cost of capital.

Overall Insights

The financial data reveals a pattern of growth, contraction, and recovery. The company's profitability, as measured by NOPAT, reflected volatility with a peak in 2022, a downturn over the next two years, then significant recovery in 2025. Invested capital steadily increased, indicating ongoing capital deployment, while the cost of capital's gradual rise may have put pressure on investment returns. Economic profit reflects these dynamics closely, showing periods of strong value creation interspersed with weaker performance and recent recovery, indicating sensitivity to profitability and cost of capital trends.

Net Income

The net income demonstrated a generally positive trend over the analyzed period, with some fluctuations. Starting at approximately 2.25 billion USD in 2020, it almost doubled in 2021 to 3.91 billion USD and increased further to about 4.61 billion USD in 2022. A slight decrease occurred in 2023, falling to 4.51 billion USD, followed by a more pronounced decline in 2024 to 3.83 billion USD. However, in 2025, net income surged significantly to approximately 5.36 billion USD, marking the highest point in the time frame.

Net Operating Profit After Taxes (NOPAT)

The NOPAT showed a generally upward trajectory until 2022, beginning at about 2.40 billion USD in 2020 and increasing substantially to approximately 5.63 billion USD by 2022. However, there was a notable reduction in the following years; NOPAT dropped to 4.06 billion USD in 2023 and further declined to 3.26 billion USD in 2024. A strong recovery is observed in 2025, with NOPAT rising sharply to around 6.11 billion USD, the highest value recorded in the examined periods.

General Observations

Both net income and NOPAT largely followed similar trends, with growth peaking in 2022, followed by declines in 2023 and 2024, prior to significant recoveries in 2025. The reductions in 2023 and 2024 suggest temporary challenges affecting profitability and operational efficiency. The considerable rebound in 2025 indicates successful measures to restore profitability and operational performance. Overall, the company appears to maintain strong profit-generating capabilities with cyclical variability.

Provision for Income Taxes

The provision for income taxes exhibits a generally increasing trend from 2020 through 2023, rising from approximately 323 million US dollars in 2020 to nearly 598 million US dollars in 2023. However, in the subsequent year (2024), there is a noticeable decline to about 532 million US dollars, before rising again significantly in 2025 to approximately 600 million US dollars. This pattern suggests some fluctuation in estimated tax liabilities despite an overall upward movement.

Cash Operating Taxes

Cash operating taxes show a consistent and marked upward trajectory over the entire period analyzed. Starting at approximately 361 million US dollars in 2020, cash taxes almost double to around 654 million US dollars in 2021. The upward momentum continues sharply into 2022 with cash taxes reaching about 883 million US dollars. Although there is a downward adjustment in 2023 and 2024—declining to roughly 782 million and 718 million US dollars respectively—the value increases again considerably in 2025 to approximately 954 million US dollars. This indicates variability in actual cash outflows for taxes, with a generally increasing trend over the six-year period.

Comparative Insights

When comparing provision for income taxes with cash operating taxes, cash taxes have consistently been higher than provisions throughout all years. The gap between these two metrics widens substantially from 2020 to 2022, implying that actual tax payments in cash increasingly exceeded estimated provisions in these years. Although provisions increase steadily, the fluctuations and higher amounts in cash operating taxes may reflect timing differences, changes in tax planning strategies, or variations in tax payments versus accrual estimates.

Total Reported Debt & Leases

The total debt and leases demonstrate a declining trend over the reported periods. Starting from approximately 5.98 billion in mid-2020, the amount decreases to around 4.76 billion by mid-2025. This suggests a possible strategy of reducing leverage or paying down debt over the years, particularly notable from mid-2024 to mid-2025.

Stockholders’ Equity

Stockholders’ equity shows a consistent upward trend across all periods. It grows from about 5.17 billion in 2020 to nearly 9.86 billion in 2025. This significant increase indicates enhanced company value or accumulated earnings, suggesting strengthened financial health and increased net assets over time.

Invested Capital

Invested capital rises steadily from approximately 11.79 billion in 2020 to around 16.36 billion in 2025, with a minor dip observed between mid-2023 and mid-2024. This overall upward movement reflects continued investment in operations or assets, supporting growth initiatives or expansion efforts.

Economic Profit Trend

The economic profit demonstrated notable fluctuations over the observed periods. It experienced a significant increase from approximately 272 million US dollars in 2020 to over 2.2 billion US dollars in 2021, reaching a peak of nearly 3.1 billion in 2022. However, a marked decline occurred in 2023, bringing economic profit down to around 1.19 billion, followed by a further dip in 2024 to about 386 million. The figure rebounded strongly in 2025, climbing back to over 2.9 billion US dollars. This pattern indicates periods of high profitability interspersed with sharp decreases, suggesting volatility in returns or extraordinary items impacting economic profit.

Invested Capital Evolution

Invested capital tended to increase steadily over the years. Starting at nearly 11.8 billion US dollars in 2020, it rose consistently each year, peaking at approximately 16.4 billion in 2025. This steady growth implies ongoing investment and expansion efforts or an accumulation of assets, which supports the company’s operational base or growth strategy. The incremental rises suggest a strategy of increasing capital deployment over the timeframe examined.

Economic Spread Ratio Fluctuations

The economic spread ratio showed considerable variation, closely mirroring the trends seen in economic profit. It jumped from a low 2.31% in 2020 to an impressive 18.18% in 2021, further increasing to 22.82% in 2022. Subsequently, it dropped significantly to 7.91% in 2023 and further down to 2.6% in 2024, before rebounding to 17.79% in 2025. This ratio’s volatility suggests varying efficiency or profitability of invested capital over time, reflecting changing operational performance or market conditions.

Overall Insights

The data depict a company experiencing cycles of strong economic profitability and returns on invested capital, interrupted by periods of decline. The consistent increase in invested capital alongside fluctuating economic profits and spread ratios highlights a complex interaction between capital deployment and profitability. The sharp dips and rebounds in economic profit and spread ratios underscore potential external or internal factors affecting performance, warranting further investigation into causes such as market dynamics, cost structure changes, or strategic shifts.

The financial data reveals notable fluctuations in the company's economic profit and adjusted revenue over the reported periods.

Adjusted Revenue

There is a general upward trend in adjusted revenue over the six-year span. The revenue increased from approximately 10.13 billion USD in 2020 to a peak of around 18.31 billion USD in 2022. A subsequent decline occurred in 2023 and 2024, dropping to values of about 17.07 billion USD and 14.62 billion USD respectively. However, the revenue rebounded substantially by 2025, reaching the highest reported value of nearly 19.57 billion USD.

Economic Profit

The economic profit showed considerable volatility. Starting at 271.9 million USD in 2020, it surged dramatically to over 2.23 billion USD in 2021, then continued rising to approximately 3.08 billion USD in 2022. A marked decline followed in 2023 to about 1.19 billion USD, with a further drop to 386 million USD in 2024. In 2025, economic profit rose sharply again, reaching approximately 2.91 billion USD.

Economic Profit Margin

The margin corresponded closely with the patterns observed in economic profit and revenue. It started low at 2.68% in 2020, peaked at 16.84% in 2022, then decreased substantially to 6.95% in 2023 and further down to 2.64% in 2024. By 2025, it improved significantly to 14.87%, approaching the earlier high levels seen in 2021 and 2022.

Overall, the data indicates periods of strong profitability and revenue growth, interspersed with years of decline or correction. The notable dips in 2023 and 2024 suggest challenges impacting profitability despite relatively elevated revenue figures. The subsequent recovery in 2025 implies an improved operational or market environment leading to enhanced economic profit and margin levels. The trends underscore a cyclical nature in financial performance, with significant variability in economic profit margin despite overall revenue growth.