Dollar General Corp. (NYSE:DG)

The financial data reveals several noteworthy trends in profitability, capital investment, and economic performance over the analyzed periods.

Net Operating Profit After Taxes (NOPAT)

NOPAT shows an overall upward trajectory from 2019 through 2023, increasing from approximately 1.98 billion USD in 2019 to a peak of around 3.66 billion USD in 2023. However, in the latest period ending February 2024, there is a significant decline, with NOPAT decreasing to approximately 2.43 billion USD. This drop suggests a recent contraction in operating profitability despite prior steady growth.

Cost of Capital

The cost of capital fluctuates slightly but remains within a relatively narrow range between 6.87% and 7.46%. Notably, the most recent period shows a decline to 6.87%, the lowest recorded in the dataset. This reduction could reflect changes in risk profile or capital market conditions, potentially easing capital expense pressures.

Invested Capital

Invested capital consistently increases throughout the observed periods, growing from approximately 18.1 billion USD in 2019 to 26.3 billion USD in 2024. This steady rise indicates ongoing investments in assets or business expansion efforts. The incremental growth suggests a commitment to increasing operational capacity or asset base over time.

Economic Profit

Economic profit mirrors the trends seen in NOPAT but with more volatility. It increased substantially from around 686 million USD in 2019 to a peak exceeding 1.89 billion USD in 2023, signifying strong value creation above the cost of capital. However, a sharp decline occurs in 2024, dropping to approximately 625 million USD. This decrease indicates a reduction in the surplus generated over capital costs, corresponding with the decline in NOPAT despite the continuous growth in invested capital.

In summary, the company exhibited sustained growth in operating profit and invested capital for most of the analyzed period, achieving increasing economic profits up to 2023. The recent data for 2024 introduces concerns due to reduced NOPAT and economic profit, suggesting a potential decrease in operational efficiency or market challenges, even as invested capital continues to rise. The declining cost of capital in the latest period may provide some alleviation but has not prevented the contraction in economic profitability.

The annual financial data indicates notable fluctuations in the profitability metrics over the presented periods.

Net Income

Net income showed a consistent increase from February 1, 2019, through January 29, 2021, rising from approximately 1.59 billion US dollars to 2.65 billion US dollars. This upward trend indicates improved profitability during these years. However, in the subsequent years, net income declined, falling to about 2.40 billion US dollars by February 3, 2023, and further decreasing to approximately 1.66 billion US dollars by February 2, 2024. This decline in net income suggests challenges impacting profitability in the most recent years analyzed.

Net Operating Profit After Taxes (NOPAT)

NOPAT similarly displayed an upward trajectory from February 1, 2019, through February 3, 2023. It grew from approximately 1.98 billion US dollars in 2019 to a peak of about 3.66 billion US dollars in 2023. This represents significant improvement in operating efficiency and profitability over this time frame. However, in the latest period ending February 2, 2024, NOPAT declined notably to around 2.43 billion US dollars, indicating a reduction in operating profitability despite the previous gains.

Overall, both net income and NOPAT exhibited substantial growth from 2019 through early 2023, reflecting enhanced financial performance and operational effectiveness. Nevertheless, the data for the most recent year reveals a marked decrease in these key profitability indicators, implying emerging issues or external factors affecting the company’s financial returns. Close monitoring and further analysis may be required to understand the drivers behind this downturn and to assess the company's future profitability prospects.

The data reflects trends in the provision for income taxes and cash operating taxes over a six-year period, from February 2019 to February 2024. Both financial items are presented in thousands of US dollars.

Provision for Income Taxes

The provision for income taxes displayed an overall upward trend between 2019 and 2023, beginning at 425,944 thousand US dollars in 2019 and peaking at 700,625 thousand US dollars in 2023. Specifically, the amount increased steadily from 2019 through 2021, reaching a high of 749,330 thousand US dollars in 2021. After this peak, the provision declined to 663,917 thousand US dollars in 2022, then rose slightly in 2023 before substantially decreasing to 458,245 thousand US dollars in 2024. This pattern suggests variability in tax expense recognition possibly influenced by changes in taxable income or tax planning strategies.

Cash Operating Taxes

Cash operating taxes also followed an increasing trend in the initial years, starting at 457,118 thousand US dollars in 2019 and reaching 823,390 thousand US dollars in 2021. This was followed by a decline in 2022 to 660,916 thousand US dollars and continued decreases through 2023 and 2024, reaching 596,198 thousand and 553,172 thousand US dollars respectively. The decline after 2021 indicates a reduction in actual cash outflows related to income taxes, which may correspond to changes in timing differences or tax provisions to cash payments.

Comparative Insights

Notably, cash operating taxes consistently exceed the provision for income taxes through 2021 but then fall below the provision in 2023 and 2024. This shift indicates a divergence between the tax expense recorded under accrual accounting (provision) and the cash paid for taxes, potentially due to deferred tax assets/liabilities or timing differences in tax payments. The peak of cash operating taxes in 2021, which is significantly higher than both preceding and subsequent years, may reflect a one-time tax payment or adjustment.

Overall, both the provision for income taxes and cash operating taxes exhibit peaks around 2021, followed by notable declines, with cash operating taxes showing a sharper descent. The divergence observed in recent years suggests evolving tax payment patterns and provision estimates that warrant closer examination for their implications on the company's tax strategy and cash flow management.

Total Reported Debt & Leases

The total reported debt and leases exhibit a consistent upward trend over the six-year period. Beginning at approximately $11.1 billion in early 2019, the figure increased steadily each year, reaching around $18.1 billion by early 2024. This represents an overall increase of roughly 63% from 2019 to 2024, with notable acceleration in growth between 2021 and 2023.

Shareholders’ Equity

Shareholders’ equity demonstrated moderate fluctuations with a slight downward trend until 2023, followed by a recovery in 2024. Initially valued at about $6.4 billion in 2019, it increased marginally in 2020 before decreasing progressively to a low of approximately $5.5 billion in early 2023. A rebound occurred in the final year to nearly $6.7 billion, almost recovering the equity levels observed at the beginning of the period.

Invested Capital

Invested capital showed a steady increase throughout the entire period. Starting at approximately $18.1 billion in 2019, it rose gradually each year, reaching about $26.3 billion by early 2024. This constitutes an increase of approximately 45% over six years, indicating continued investment and growth in capital base. The increases are consistent and without significant volatility.

Overall Analysis

The company appears to have increased its leverage significantly, as evidenced by the growing total reported debt and leases, which outpaced the growth in shareholders’ equity. Despite a temporary decline in equity through 2023, the final year saw a recovery to prior levels. The consistent rise in invested capital alongside increasing debt suggests an expansion strategy possibly funded by borrowing. The leverage position warrants monitoring due to the growing debt level relative to equity.

The financial data reveals notable shifts in economic profit, invested capital, and economic spread ratio across the examined periods.

Economic Profit

Economic profit demonstrated a positive trend from 2019 through 2023, rising from approximately 686 million US dollars to a peak of around 1.89 billion US dollars. However, a significant decrease is observed in 2024, where economic profit declines sharply to about 625 million US dollars. This indicates a strong performance over most of the period, followed by a considerable reduction in profitability in the latest year.

Invested Capital

Invested capital consistently increased each year, starting at roughly 18.1 billion US dollars in 2019 and reaching approximately 26.3 billion US dollars by 2024. This steady growth reflects ongoing capital deployment and expansion initiatives over the period.

Economic Spread Ratio

The economic spread ratio initially improved, rising from 3.79% in 2019 to a peak of 7.63% in 2023, indicative of enhanced returns on invested capital and efficient capital utilization. Nevertheless, a marked contraction occurred in 2024, dropping sharply to 2.38%. This reversal suggests diminished effectiveness in generating economic profit relative to capital invested in the most recent year.

Overall, the data depicts a period of growth and increasing profitability up to 2023, supported by both enhanced economic spread and increased capital investment. The downturn observed in 2024, characterized by significant declines in economic profit and economic spread ratio despite continued capital investment growth, may warrant further analysis to understand potential operational challenges or market conditions impacting performance.

The financial data over the six-year period reveals notable trends in key performance metrics.

Economic Profit

The economic profit showed an overall increasing trend from 2019 through 2023, peaking at 1,890,300 thousand US dollars in 2023. However, there is a significant decline in 2024, with economic profit dropping to 625,362 thousand US dollars. This indicates a substantial reduction in economic value generated in the most recent period, despite earlier growth.

Net Sales

Net sales steadily increased each year, moving from approximately 25.6 billion US dollars in 2019 to nearly 38.7 billion US dollars by 2024. The growth rate appears consistent but shows a slowing pace toward the final years, with smaller increments between 2023 and 2024 compared to prior years.

Economic Profit Margin

The economic profit margin remained stable at 2.68% in the initial two years, followed by a rise to a peak of 4.99% in 2023, indicating enhanced profitability relative to sales. However, there is a sharp decline to 1.62% in 2024, reflecting reduced efficiency in generating economic profit from sales despite the continued increase in net sales.

In summary, while net sales demonstrated steady growth throughout the period, economic profit and profit margins improved considerably until 2023 but faced a marked downturn in 2024. This divergence suggests possible increases in costs, investments, or other financial pressures impacting profitability despite higher sales volumes in the most recent year.