Qualcomm Inc. (NASDAQ:QCOM)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes shows a fluctuating trend over the six-year period. From 2019 to 2020, there is a noticeable decline from 5,963 to 4,798 million US dollars. However, this is followed by a substantial increase in 2021 and 2022, reaching a peak of 13,145 million US dollars in 2022. The figure then declines sharply in 2023 to 5,865 million before partially rebounding to 8,262 million in 2024.

Cost of Capital

The cost of capital maintains a relatively stable trend with a slight upward trajectory throughout the period. It increased steadily from 15.21% in 2019 to 16.44% in 2024, indicating a marginally higher required return on invested capital over time.

Invested Capital

Invested capital exhibits a variable but generally upward trend across the years. It starts at 21,089 million US dollars in 2019, dips to 17,459 million in 2020, then rises steadily through the following years, peaking at 31,383 million in 2023, with a slight decrease to 30,887 million in 2024.

Economic Profit

Economic profit experiences significant fluctuations. It declines from 2,755 million US dollars in 2019 to 2,031 million in 2020, then sharply increases in 2021 and 2022, reaching a high of 8,501 million in 2022. A pronounced drop occurs in 2023, falling to 860 million, followed by a recovery to 3,185 million in 2024.

Overall Insights

The data reveals notable volatility in profitability metrics, with peak operating and economic profits occurring in 2022, followed by marked declines in 2023. The invested capital consistently grows over the longer term despite some yearly variations, indicating increased resource allocation. The gradual rise in the cost of capital suggests a mildly increasing cost environment. The variations in economic profit closely mirror those in NOPAT, implying that changes in return dynamics have had substantial impacts on value creation year-over-year.

The financial data reveals notable fluctuations in both net income and net operating profit after taxes (NOPAT) over the analyzed six-year period.

Net Income

Net income demonstrated a general upward trajectory from 2019 through 2022, with a marked increase from $4,386 million in 2019 to $12,936 million in 2022. This indicates a strong growth phase during these years.

However, in 2023, net income experienced a significant decline, dropping to $7,232 million, which is approximately a 44% decrease from the previous year. This suggests a material change in profitability or potential challenges faced during this period.

In 2024, net income recovered to $10,142 million, indicating a rebound though still below the peak achieved in 2022.

Net Operating Profit After Taxes (NOPAT)

NOPAT followed a somewhat similar pattern to net income, initially decreasing from $5,963 million in 2019 to $4,798 million in 2020, which contrasts with the initial increase in net income for 2020. This may reflect operational challenges or higher effective tax rates impacting after-tax operating profit in that year.

From 2020 onwards, NOPAT increased substantially to reach its peak of $13,145 million in 2022, consistent with the peak seen in net income, indicating strong operating performance.

In 2023, NOPAT dropped sharply to $5,865 million, representing a more pronounced decline compared to net income for the same period. This could suggest operational inefficiencies, increased costs, or other factors adversely impacting core operations.

By 2024, NOPAT improved to $8,262 million, showing partial recovery though remaining significantly below the 2022 peak.

Overall, the data indicates strong growth up to 2022 followed by a considerable dip in 2023 in both net income and NOPAT. The subsequent recovery in 2024, while positive, does not fully restore performance to prior peak levels. The larger proportional decline and slower recovery in NOPAT compared to net income in the downturn suggest that underlying operating profitability was particularly affected during the challenging period.

Income tax provision from continuing operations

The income tax provision experienced a significant decline from 3,095 million USD in 2019 to 521 million USD in 2020. Following this sharp decrease, the provision saw a moderate recovery, rising to 1,231 million USD in 2021 and further increasing to 2,012 million USD in 2022. However, in the subsequent years, it sharply declined again to 104 million USD in 2023, before slightly rebounding to 226 million USD in 2024. This pattern suggests considerable volatility in the tax expense, with substantial fluctuations over the period examined.

Cash operating taxes

Cash operating taxes demonstrated a somewhat different trend compared to the income tax provision. After a decrease from 1,167 million USD in 2019 to 793 million USD in 2020, cash operating taxes increased significantly to 1,484 million USD in 2021 and continued to rise to 2,189 million USD in 2022. Although there was a decline in 2023 to 1,803 million USD, cash operating taxes increased again to 2,127 million USD in 2024. Overall, this indicates a generally upward trend in cash operating taxes over the timeframe, with occasional decreases but a recovery subsequent to those declines.

Comparative observations

The divergence between income tax provision and cash operating taxes is notable. While the income tax provision shows high variability and generally lower levels in recent years, cash operating taxes have trended upwards, suggesting possible timing differences or adjustments affecting the provision relative to actual tax cash outflows. The disparity between accrued tax expense and cash taxes paid might warrant further investigation to understand tax accounting policies or one-time tax impacts during this period.

Total Reported Debt & Leases

The total reported debt and leases exhibit a slightly decreasing trend over the analyzed periods. Starting from US$16,287 million in 2019, the figure shows minor fluctuations but generally moves downward to US$15,440 million by 2024. This reflects a moderate reduction in leverage or financial obligations over time.

Stockholders’ Equity

Stockholders’ equity demonstrates a strong upward trajectory throughout the periods. Beginning at US$4,909 million in 2019, equity increases significantly each year, reaching US$26,274 million in 2024. This substantial rise indicates a growing value attributable to shareholders, possibly due to profitable operations, retained earnings accumulation, or capital injections.

Invested Capital

Invested capital presents a more variable pattern with an overall increase. It starts at US$21,089 million in 2019, decreases to a low of US$17,459 million in 2020, then rises steadily to a peak of US$31,383 million in 2023, before a slight decline to US$30,887 million in 2024. This suggests increased investment in the company's operational assets or business expansions with some stabilization in the final year.

Insights

The data indicates a strengthening equity base and relatively stable or diminishing debt levels, which could enhance the company's financial stability and creditworthiness. The upward movement in invested capital corresponds with the growth in equity, implying that the company is reinvesting funds to support expansion or operational capacity. The moderate decline in invested capital in the last period may suggest a phase of consolidation or optimization of asset deployment.

Economic Profit Trend

The economic profit exhibits considerable volatility over the analyzed periods. It decreased from 2,755 million USD in 2019 to 2,031 million USD in 2020, followed by a significant increase to 5,318 million USD in 2021 and a further rise to 8,501 million USD in 2022. However, the profit dramatically declined to 860 million USD in 2023, before partially recovering to 3,185 million USD in 2024. This pattern suggests periods of strong performance interspersed with a sharp downturn and subsequent recovery.

Invested Capital Movement

Invested capital declined from 21,089 million USD in 2019 to 17,459 million USD in 2020, then increased steadily to 20,003 million USD in 2021 and surged to 29,132 million USD in 2022. It continued to grow to 31,383 million USD in 2023 before experiencing a slight decline to 30,887 million USD in 2024. Overall, there is an increasing trend in invested capital after an initial drop, signaling expanding capital allocation with a minor recent pullback.

Economic Spread Ratio Analysis

The economic spread ratio follows a similar volatile pattern to economic profit. It decreased from 13.06% in 2019 to 11.63% in 2020, then sharply increased to 26.59% in 2021 and peaked at 29.18% in 2022. It then plummeted to 2.74% in 2023, indicating a significant reduction in economic profit relative to invested capital, before recovering moderately to 10.31% in 2024. This ratio reflects fluctuations in profitability relative to invested resources, with notable peaks in 2021 and 2022 and a sharp decline thereafter.

Overall Insights

The data reveal a period of growth and improved profitability up to 2022, as evidenced by rising economic profit, invested capital, and economic spread. The marked decrease in economic profit and economic spread in 2023 suggests challenges affecting returns on the increased capital. The partial recovery in 2024 may indicate stabilization efforts or improving operational efficiency, but profitability remains below peak levels. Monitoring capital deployment efficiency and profit generation appears crucial for future performance.

Adjusted Revenues

The adjusted revenues demonstrate a generally increasing trend from 2019 to 2024, rising from $23,878 million in 2019 to $38,955 million in 2024. The notable increase occurred between 2020 and 2022, with revenues growing from $23,135 million to $43,737 million, peaking in 2022. A decline followed in 2023 to $35,699 million, after which revenues partially recovered in 2024.

Economic Profit

Economic profit shows considerable volatility across the years. Starting at $2,755 million in 2019, it declined to $2,031 million in 2020, then sharply increased to a peak of $8,501 million in 2022. This peak was followed by a significant drop to $860 million in 2023, with some recovery to $3,185 million in 2024. The fluctuations suggest periods of both strong earnings generation and financial pressure.

Economic Profit Margin

The economic profit margin follows a pattern consistent with economic profit values. It started at 11.54% in 2019, declined to 8.78% in 2020, then improved significantly to 19.44% by 2022, indicating enhanced profitability efficiency during that period. A sharp decrease followed, falling to 2.41% in 2023, before partial improvement to 8.18% in 2024, pointing to challenges in maintaining profit efficiency despite revenue growth.

Overall Insights

The data reveals a period of robust growth and profitability efficiency up to 2022, marked by increasing revenues and economic profit margin. However, the company experienced a downturn in 2023, with sharp declines in economic profit and profit margin despite relatively high revenues. The partial recovery in 2024 indicates efforts to stabilize profitability. The pronounced volatility suggests that while revenue growth is generally positive, profitability and economic profit margins are subject to significant external or internal influences affecting operational efficiency.