Qualcomm Inc. (NASDAQ:QCOM)

Net Operating Profit After Taxes (NOPAT)

The net operating profit experienced significant fluctuations over the observed periods. Starting at 5,963 million in 2019, there was a notable decline to 4,798 million in 2020. This was followed by a strong recovery and substantial growth peaking at 13,145 million in 2022. However, the profit dropped sharply to 5,865 million in 2023, before partially recovering to 8,262 million in 2024.

Cost of Capital

The cost of capital showed a gradual upward trend. It increased from 15.44% in 2019 to 16.21% in 2021, remaining relatively stable until 2023. In 2024, it increased further to 16.69%, representing a modest but consistent rise over the six-year period.

Invested Capital

Invested capital displayed a mixed trend with an initial decrease from 21,089 million in 2019 to 17,459 million in 2020. Thereafter, it rose steadily, reaching a peak of 31,383 million in 2023, before a slight decline to 30,887 million in 2024. This indicates increasing investment in assets or business expansion activities over the majority of the period.

Economic Profit

The economic profit mirrored the volatility found in NOPAT but with more pronounced variation in relative terms. It decreased from 2,706 million in 2019 to 1,988 million in 2020, then surged to a high of 8,430 million in 2022. This was followed by a steep decline to 784 million in 2023, before recovering to 3,107 million in 2024. These fluctuations suggest changing efficiency in generating returns above the cost of capital.

Summary of Trends

Overall, the data reveals a pattern of volatility interspersed with strong recovery phases in profitability metrics. Despite a generally rising cost of capital, invested capital increased significantly over the period, indicating sustained or increased asset base investment. The cyclical nature of economic profit and NOPAT suggests variable operational performance and challenges in maintaining consistent value creation relative to capital costs.

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

The economic profit exhibited considerable volatility over the reviewed period. Beginning with $2,706 million in 2019, it decreased to $1,988 million in 2020, followed by a significant increase to $5,269 million in 2021. The upward trend continued sharply to $8,430 million in 2022; however, it then declined drastically to $784 million in 2023 before partially recovering to $3,107 million in 2024. This pattern suggests periods of substantial value generation interspersed with episodes of weakened economic profit.

Invested Capital

Invested capital showed a fluctuating but generally increasing trend over the years. Starting at $21,089 million in 2019, it decreased to $17,459 million in 2020. Thereafter, it rose steadily each year, reaching $20,003 million in 2021, $29,132 million in 2022, $31,383 million in 2023, and slightly declining to $30,887 million in 2024. This indicates an overall expansion in capital committed to operations, with a brief contraction early in the period and a small decline at the end.

Economic Spread Ratio

The economic spread ratio mirrored the fluctuations in economic profit, reflecting changing returns on invested capital. It started at 12.83% in 2019 and declined to 11.39% in 2020. The ratio then increased substantially to 26.34% in 2021 and peaked at 28.94% in 2022, signaling impressive returns during these years. However, a sharp drop to 2.50% occurred in 2023, followed by a moderate recovery to 10.06% in 2024. This reveals a period of highly efficient capital utilization yielding superior returns that sharply diminished before improving once again.

The financial data over the six-year period reveals significant fluctuations in performance metrics. Adjusted revenues showed an overall increasing trend, with a notable rise from 23,878 million USD in 2019 to 38,955 million USD in 2024. This growth was marked by a substantial jump between 2020 and 2022, reaching a peak of 43,737 million USD in 2022, before experiencing a decline in 2023 and a moderate recovery in 2024.

Economic profit displayed considerable volatility throughout the period. Starting at 2,706 million USD in 2019, it decreased to 1,988 million USD in 2020, then surged to a peak of 8,430 million USD in 2022. Following this peak, economic profit dropped sharply to 784 million USD in 2023, but rebounded to 3,107 million USD in 2024. This pattern indicates significant variability in profitability that does not always correlate directly with revenue changes.

The economic profit margin, which measures economic profit relative to revenues, mirrors the fluctuations seen in economic profit. The margin began at 11.33% in 2019, declined to 8.59% in 2020, then increased substantially to 19.27% in 2022. After reaching this high point, it sharply decreased to 2.2% in 2023, before improving to 7.98% in 2024. This variation suggests shifts in operational efficiency or cost structures over time.

Adjusted Revenues

Generally increased from 2019 to 2024, with a peak in 2022 and a subsequent dip in 2023 before recovering in 2024.

Economic Profit

Exhibited significant volatility, with a peak in 2022 followed by a pronounced decline in 2023 and a recovery in 2024.

Economic Profit Margin

Varied in line with economic profit changes, highlighting periods of improved and reduced profitability relative to revenues.

Overall, the data suggests periods of strong growth and profitability culminating around 2022, followed by challenges in 2023 that impacted economic profit and margin more severely than revenues. The subsequent partial recovery in 2024 indicates potential stabilization or improvement efforts. This dynamic underscores the importance of analyzing profitability beyond revenue trends to understand the company's financial health more comprehensively.