Dollar General Corp. (NYSE:DG)

Net operating profit after taxes (NOPAT)

The NOPAT exhibited a generally upward trend from 2019 through 2023, increasing from approximately $1.98 billion to around $3.66 billion. However, in the most recent period of 2024, there was a notable decline to approximately $2.43 billion, indicating a setback after several years of growth.

Cost of capital

The cost of capital showed a gradual increase from 7.22% in 2019 to a peak of 7.53% in 2022. From 2022 to 2024, the cost of capital decreased steadily to 6.92%, the lowest point observed within the six-year span.

Invested capital

The invested capital consistently increased each year, rising from approximately $18.1 billion in 2019 to about $26.3 billion in 2024. This indicates a steady expansion in the capital base over the period analyzed.

Economic profit

Economic profit grew substantially from $674.2 million in 2019 to a peak of approximately $1.87 billion in 2023. However, similar to NOPAT, there was a sharp decline in 2024, dropping to about $610 million, which may reflect decreased profitability relative to the cost of capital and invested capital.

Overall, the data suggests that while the company experienced growth in profitability and capital investment through 2023, the year 2024 marked a period of declining profitability and reduced economic value creation. The decrease in cost of capital could have partially cushioned the impact. The significant drop in both NOPAT and economic profit in 2024 warrants further investigation to identify underlying causes.

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.

Economic Profit

The economic profit exhibited a significant upward trend from 2019 to 2021, rising from approximately 674 million to over 1.55 billion US dollars. This peak was followed by a slight decline in 2022 to approximately 1.49 billion, then a further increase to around 1.87 billion in 2023. However, in 2024 there was a considerable decrease to around 610 million US dollars, indicating a notable reduction in economic profit relative to prior years.

Invested Capital

The invested capital showed consistent growth throughout the period under review. Starting at roughly 18.1 billion US dollars in 2019, the invested capital increased steadily each year, reaching approximately 26.3 billion US dollars in 2024. This represents a substantial accumulation of capital investment over six years, suggesting sustained expansion or asset acquisition during this time.

Economic Spread Ratio

The economic spread ratio maintained a relatively stable but low level in 2019 and 2020, around 3.7 to 3.8%. In 2021, there was a sharp increase to 7.44%, followed by a slight decline in 2022 and a modest rise again in 2023, peaking at 7.57%. In 2024, this ratio dropped significantly to 2.32%, the lowest point in the data set. This volatility indicates fluctuations in the company's ability to generate returns over the cost of capital, with a notable weakening in the most recent year.

Economic Profit

The economic profit of the company demonstrated an overall increasing trend from 2019 to 2023, starting at approximately 674 million USD in 2019 and peaking at about 1.87 billion USD in 2023. However, in the most recent year, 2024, economic profit experienced a substantial decline to around 610 million USD, indicating a marked contraction in economic value generated during that period.

Net Sales

Net sales showed consistent growth over the entire period under review. Beginning at approximately 25.6 billion USD in 2019, net sales increased steadily each year, reaching about 38.7 billion USD in 2024. This reflects a sustained expansion in revenue generation capacity, with only modest acceleration in sales increments in recent years.

Economic Profit Margin

The economic profit margin maintained a relatively stable level around 2.63% in both 2019 and 2020 before rising significantly to a peak of 4.95% in 2023. This suggests improved efficiency or profitability relative to sales during this period. Nonetheless, in 2024, the margin sharply decreased to 1.58%, indicating that despite higher sales, profitability relative to net sales has worsened significantly.