Dollar General Corp. (NYSE:DG)

Net operating profit after taxes (NOPAT)

The NOPAT exhibited a consistent upward trend from 2019 through 2023, increasing from approximately 1.98 billion USD to about 3.66 billion USD. However, in 2024, there was a notable decline to roughly 2.43 billion USD, indicating a reduction in operational profitability relative to the previous year.

Cost of capital

The cost of capital showed minor fluctuations over the years. It rose gradually from 7.17% in 2019 to a peak of 7.48% in 2022 before decreasing to 6.88% by 2024. This suggests a slight easing in capital expenses or risk perception by investors in the most recent period.

Invested capital

Invested capital displayed a steady increase year over year, rising from approximately 18.1 billion USD in 2019 to 26.3 billion USD in 2024. This steady growth implies ongoing investment in assets or expansion efforts over the period.

Economic profit

Economic profit grew significantly from 2019 to 2023, rising from about 683 million USD to nearly 1.89 billion USD, reflecting improved value creation above the cost of capital. However, in 2024, economic profit sharply declined to 621 million USD, indicating a substantial reduction in value generation despite the lower cost of capital.

Overall Analysis

The financial data indicate the company experienced growth in profitability, capital investment, and economic profit up to 2023. The dip in NOPAT and economic profit in 2024 suggests challenges in maintaining operating efficiency or revenue levels, despite a favorable cost of capital environment. The continued increase in invested capital during this period raises questions about return on investment efficiency. Monitoring these trends will be essential to assess future financial health and strategic decision-making.

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 trends regarding economic profit, invested capital, and economic spread ratio over the six-year period.

Economic Profit

Economic profit experienced variability with an initial growth from approximately $683 million in early 2019 to a peak exceeding $1.56 billion in early 2021. This high level was maintained in early 2022 and further increased in early 2023, surpassing $1.88 billion. However, a significant decline occurred in early 2024, with economic profit dropping to approximately $621 million, representing the lowest point in the observed period.

Invested Capital

Invested capital showed a consistent upward trend throughout the period. Starting at approximately $18.1 billion in early 2019, the invested capital steadily increased each year, reaching about $26.3 billion by early 2024. This indicates ongoing capital allocation or investment expansion over time.

Economic Spread Ratio

The economic spread ratio, reflecting the margin between return on invested capital and cost of capital, started at 3.77% in early 2019, showing a gradual increase to a peak of 7.62% by early 2023. This trend signifies improving economic returns relative to capital costs during this timeframe. However, in early 2024, the ratio experienced a sharp decline to 2.36%, suggesting a significant reduction in economic profitability relative to invested capital costs in the most recent year.

Overall, while invested capital consistently grew, economic profit and the economic spread ratio exhibited strong improvements until early 2023, followed by a marked decline in early 2024. This pattern may indicate changing market conditions, cost structures, or investment returns that should be further investigated to understand the underlying causes of the recent downturn in profitability metrics.

Economic Profit

The Economic Profit demonstrates a fluctuating trend across the periods analyzed. Starting at 682,873 thousand US dollars in 2019, there is an overall increase reaching its peak at 1,565,043 thousand US dollars in 2021. There is a slight decline observed in 2022 to 1,504,419 thousand US dollars, followed by an increase in 2023 to 1,885,930 thousand US dollars. However, in 2024, the Economic Profit experiences a significant decrease to 621,176 thousand US dollars, marking the lowest value since 2019.

Net Sales

Net sales exhibit a consistent upward trajectory over the six-year period. Beginning at approximately 25.6 billion US dollars in 2019, net sales increased steadily each year, reaching around 38.7 billion US dollars by 2024. The growth rate between years shows no sharp fluctuations, indicating stable revenue expansion.

Economic Profit Margin

The Economic Profit Margin percentage mirrors the volatility seen in Economic Profit but presents additional insights. Initially stable at roughly 2.66-2.67% in 2019 and 2020, it rises markedly to 4.64% in 2021. A slight decrease to 4.4% occurs in 2022, after which it improves to a peak of 4.98% in 2023. Nonetheless, the most recent figure in 2024 sharply declines to 1.61%, the lowest margin observed in the period under review, suggesting reduced profitability relative to sales despite the ongoing revenue growth.