Micron Technology Inc. (NASDAQ:MU)

Net Operating Profit After Taxes (NOPAT)

The company experienced a significant increase in NOPAT from 2,891 million in 2020 to a peak of 9,071 million in 2022. However, in 2023, there was a drastic decline resulting in a negative value of -5,885 million, indicating a substantial operational loss. In 2024, NOPAT recovered somewhat to 857 million and further improved to 8,713 million in 2025, approaching previous peak levels. This pattern highlights considerable volatility in operational profitability over the examined period.

Cost of Capital

The cost of capital showed slight fluctuations between 16.07% and 17.21% throughout the years. Starting at 16.25% in 2020, it peaked at 17.21% in 2025. The overall increase suggests modest upward pressure on the company’s required return, which may be attributed to changing market conditions or risk perceptions.

Invested Capital

The invested capital steadily increased from 42,291 million in 2020 to 61,173 million in 2025. This growth was relatively consistent each year, reflecting ongoing investment in assets or capital projects. The accumulation in invested capital suggests long-term growth initiatives or expansion despite fluctuations in profitability.

Economic Profit

Economic profit figures were negative in 2020 and 2021, at -3,983 million and -1,795 million respectively, implying that returns were below the cost of capital during those years. A positive economic profit of 361 million was recorded in 2022, coinciding with the peak in NOPAT, indicating value creation. However, economic profit sharply worsened again in 2023 and 2024, reaching -14,480 million and -8,004 million respectively, reflecting significant value destruction. In 2025, the economic profit improved considerably to -1,817 million but remained negative, suggesting that despite operational recovery, the returns had not fully surpassed the capital costs.

Overall Insights

The data reveal a volatile operational and economic performance with cyclical fluctuations in profitability and value creation. While the company expanded its invested capital base steadily, periods of negative economic profit highlight challenges in generating returns that exceed capital costs, particularly in 2023 and 2024. The recovery signs in 2025 suggest improved operational efficiency or market conditions, but continued monitoring of economic profit relative to invested capital and cost of capital will be crucial for assessing sustainable value generation.

Net Income (Loss) Attributable to Micron

The net income exhibited significant fluctuations over the observed periods. Starting from a positive value of 2,687 million USD in 2020, there was a substantial increase to 5,861 million USD in 2021, followed by a further rise to 8,687 million USD in 2022. However, the year 2023 saw a marked reversal with a net loss of 5,833 million USD. Subsequently, the net income rebounded in 2024 to a positive 778 million USD and further increased to 8,539 million USD in 2025. This pattern highlights considerable volatility in profitability, with a notable dip in 2023 amidst an overall upward trajectory in net income.

Net Operating Profit After Taxes (NOPAT)

NOPAT reflected a trend similar to net income, indicating a strong correlation between operating profitability and net earnings. The figure rose steadily from 2,891 million USD in 2020 to 5,967 million USD in 2021 and reached a peak of 9,071 million USD in 2022. A sharp decline occurred in 2023, with NOPAT turning negative at -5,885 million USD. Recovery ensued in 2024 with a modest positive value of 857 million USD and a significant improvement to 8,713 million USD in 2025. This indicates that operating efficiency and after-tax operating profits experienced a disruption in 2023 but resumed a positive and robust recovery in the subsequent years.

Overall Trends and Insights

Both net income and NOPAT demonstrated robust growth through 2022, followed by a critical downturn in 2023. The sharp declines in 2023 suggest an extraordinary or challenging event impacting profitability and operational effectiveness during that year. The recovery in 2024 and strong performance in 2025 reflect resilience and an effective restoration of earnings capacity. The data suggests that despite volatility, the company managed to return to a growth trajectory in profitability in the most recent period.

Income Tax Provision

Over the examined periods, the income tax provision exhibits considerable volatility. Starting at 280 million USD in 2020, it rose significantly to 394 million USD in 2021. The figure then more than doubled to 888 million USD in 2022, indicating a substantial increase in tax expenses or taxable income during that year. However, in 2023, the income tax provision sharply declined to 177 million USD, the lowest in the observed timeframe. It then rebounded to 451 million USD in 2024 and reached a peak of 1,124 million USD in 2025, marking the highest level recorded. This pattern suggests fluctuations in profitability or changes in tax strategy, with a notable upward trend towards the latter periods.

Cash Operating Taxes

Cash operating taxes demonstrate a parallel yet slightly less volatile pattern compared to the income tax provision. Beginning at 189 million USD in 2020, the amount increased to 446 million USD in 2021 and further rose to 618 million USD in 2022. A significant decline occurred in 2023, where the cash operating taxes dropped to 172 million USD, closely mirroring the income tax provision trend. Following this low point, there was a recovery to 428 million USD in 2024, and a substantial increase to 963 million USD in 2025. The overall trajectory shows growth in cash taxes paid, with a notable dip in 2023, suggesting changes in operating income or tax payments timing.

Comparative Analysis

Both income tax provision and cash operating taxes reveal correlated fluctuations across the years, with peaks in 2022 and 2025 and a pronounced trough in 2023. The income tax provision consistently exceeds cash operating taxes, indicating differences likely due to deferred tax adjustments or non-cash tax expenses. The sharp variations imply that fiscal results and tax obligations experienced significant shifts over the period, possibly impacted by changes in earnings, tax legislation, or accounting practices.

Total Reported Debt & Leases

The total reported debt and leases demonstrate a fluctuating upward trend over the analyzed periods. Initially, the amount increased slightly from 7,230 million USD in 2020 to 7,576 million USD in 2022. A significant rise occurred between 2022 and 2023, with the value nearly doubling to 13,999 million USD. This elevated level of debt and leases was sustained through 2024 and increased further to 15,352 million USD in 2025, indicating an increasing reliance on debt financing in recent years.

Shareholders’ Equity

Shareholders’ equity generally exhibited growth over the reported timeframe, rising from 38,996 million USD in 2020 to a peak of 49,907 million USD in 2022. However, in 2023, equity declined to 44,120 million USD before resuming an upward trend, reaching 54,165 million USD in 2025. This pattern suggests some volatility, but a longer-term positive increase in equity base is evident by the end of the period.

Invested Capital

Invested capital shows an overall growth trend, moving from 42,291 million USD in 2020 to 61,173 million USD in 2025. The increase appears steady, with minor fluctuations around 2023 and 2024 when the invested capital plateaued near 53,000 million USD before rising again. This reflects a consistent expansion in the company's total capital commitment over the examined years.

General Insights

The data indicates that the company has been increasing its use of debt and leases substantially since 2022, which has contributed to rising invested capital. Despite some fluctuations in shareholders’ equity, the overall capital structure suggests growth and increased financial leverage. The simultaneous growth in both equity and debt levels points to an expansion strategy that involves utilizing both internal funds and external borrowings.

The analysis of the annual financial data reveals significant fluctuations in the company's economic profit, invested capital, and economic spread ratio over the reported periods.

Economic Profit

The economic profit shows a volatile pattern. Starting from a substantial loss of 3983 million US dollars in the first period, it improves to a loss of 1795 million, then shifts to a positive economic profit of 361 million by the third period. However, this gain is followed by a sharp decline to a significant loss of 14480 million, then a decrease in losses to 8004 million and finally 1817 million respectively in the following periods. This trend suggests periods of both economic value creation and destruction, with particularly severe downturns in the fourth and fifth periods.

Invested Capital

Invested capital exhibits a general upward trend throughout the periods, increasing steadily from 42291 million US dollars to 61173 million US dollars by the last period. This consistent growth indicates substantial investment and expansion efforts despite fluctuations in profitability.

Economic Spread Ratio

The economic spread ratio, which reflects the return on invested capital relative to the cost of capital, fluctuates in line with economic profit. Initially negative at -9.42%, it improves considerably to a positive 0.68% before deteriorating dramatically to -27.08% in the fourth period. Subsequent periods show a partial recovery yet remain negative at -15.01% and -2.97%. The persistently negative spread ratios in recent years suggest the company has struggled to generate returns exceeding its cost of capital.

Overall, the data indicates a challenging financial environment with ample invested capital but unstable profitability and returns. The sharp variability in economic profit and economic spread ratio, alongside the steady increase in invested capital, may point to operational difficulties or changes in market conditions impacting the company's economic value generation. This pattern warrants further investigation into cost structure, revenue streams, and capital allocation efficiency.

The financial data reveals several significant trends over the periods under review, focusing primarily on economic profit, revenue, and economic profit margin.

Economic Profit

The economic profit exhibits substantial volatility across the years. Initially, there is a negative economic profit of -3983 million US dollars, which improves notably to -1795 million and eventually turns positive at 361 million. However, this positive trend reverses sharply in the next period to a profound loss of -14480 million, followed by partial recoveries to -8004 million and -1817 million, respectively. This pattern indicates considerable fluctuations in profitability, with periods of both commendable improvement and significant declines.

Revenue

The revenue figures display an overall upward trend despite some irregularities. Starting at 21435 million US dollars, revenue increases steadily to 27705 million and further to 30758 million. A marked decline follows, dropping to 15540 million but is followed by a strong rebound back to 25111 million and a subsequent rise to 37378 million. This progression reflects resilience with the ability to recover and surpass previous revenue peaks after downturns.

Economic Profit Margin

The economic profit margin closely mirrors the volatility seen in economic profit. Initially very negative at -18.58%, it improves consistently to -6.48% and even achieves a positive margin of 1.17%. Then, similarly to economic profit, it deteriorates sharply to -93.18%, before recovering to -31.87% and further to -4.86%. These shifts indicate significant swings in profitability efficiency relative to revenue, with periods of both modest profitability and substantial losses.

Overall, despite revenue growth trends, the data reflects persistent challenges in achieving stable economic profitability. The sharp fluctuations in economic profit and its margin suggest sensitivity to underlying cost structures or external factors impacting profitability. The recovery phases illustrate potential operational strengths, yet volatility signals underlying risks that may need to be addressed for sustained financial health.