Dollar General Corp. (NYSE:DG)

The financial data reveals distinct trends and fluctuations across the key profitability and capital metrics over the six-year span.

Net Operating Profit After Taxes (NOPAT)

NOPAT shows a general upward trend from 2019 to 2023, increasing from approximately 1.98 billion US dollars to 3.66 billion US dollars. However, in the latest period ending in early 2024, NOPAT experiences a significant decline to around 2.43 billion US dollars, indicating a reversal in operational profitability.

Cost of Capital

The cost of capital remains relatively stable with minor fluctuations. It moved upward from 7.12% in 2019 to a peak of 7.43% in 2022, then trended downward to 6.84% by 2024. The reduction towards the end of the period could signal improved risk perception or changes in the market environment affecting the company’s capital pricing.

Invested Capital

The invested capital consistently increases throughout the entire timeline, starting from approximately 18.1 billion US dollars in 2019 and reaching about 26.3 billion US dollars by 2024. This steady growth suggests ongoing capital investments or asset accumulation to support business activities and growth prospects.

Economic Profit

Economic profit exhibits strong growth between 2019 and 2023, rising from around 692 million US dollars to nearly 1.9 billion US dollars. This indicates efficient value creation above the cost of capital during this period. However, similar to NOPAT, economic profit declines sharply in 2024 to approximately 633 million US dollars, which may point to reduced excess returns on invested capital or challenges impacting profitability relative to capital costs.

In summary, the company's financial performance demonstrated strong improvement in profitability and value creation metrics up to 2023, supported by growing invested capital and relatively stable cost of capital. The recent downturn in both NOPAT and economic profit in 2024 warrants attention as it may reflect emerging operational or market challenges affecting financial returns despite ongoing capital investment.

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 analysis of the annual financial data reveals several significant trends in the economic performance and capital deployment over the six-year period.

Economic Profit

The economic profit showed an overall upward trend from 2019 through 2023, increasing from approximately 692 million US dollars to nearly 1.9 billion US dollars. This indicates that the company was able to generate increasing value beyond its cost of capital during this period. However, in 2024, there was a notable decline, with economic profit dropping to around 633 million US dollars, signaling a decrease in value creation compared to prior years.

Invested Capital

The invested capital steadily increased each year, rising from about 18.1 billion US dollars in 2019 to approximately 26.3 billion US dollars in 2024. This consistent growth suggests ongoing investments into the company's assets or increased capital requirements to support operations and growth initiatives.

Economic Spread Ratio

The economic spread ratio, representing the difference between returns on invested capital and cost of capital, exhibited fluctuations during the period. The ratio started at 3.82% in 2019, gradually increasing to peak near 7.67% in 2023, reflecting improved profitability relative to capital costs. However, a sharp decrease to 2.41% in 2024 indicates a significant contraction in the economic profit margin per capital employed, implying reduced efficiency in generating returns above the capital cost.

In summary, over the analyzed timeframe, the company expanded its capital base and initially improved its profitability metrics, achieving higher economic profit and economic spread ratios. The decline in both economic profit and spread ratio in the most recent year suggests emerging challenges in maintaining value creation and return efficiency, despite increased capital investment. This development warrants further investigation into underlying operational or market factors impacting performance.

The financial data reveals several notable trends over the analyzed periods, particularly in economic profit, net sales, and economic profit margin.

Net Sales

There is a consistent upward trend in net sales over the six-year period. The net sales increased from approximately 25.6 billion US dollars in early 2019 to nearly 38.7 billion US dollars by early 2024. This steady growth indicates sustained revenue expansion year over year, with notable jumps, particularly between 2020 and 2021.

Economic Profit

Economic profit shows a more fluctuating pattern compared to net sales. Starting at approximately 692 million US dollars in early 2019, economic profit increased steadily and significantly peaked during 2021 at around 1.58 billion US dollars. However, after this peak, it declined in 2022 to about 1.52 billion US dollars, rose again in 2023 to nearly 1.9 billion US dollars, but then dramatically dropped to 633 million US dollars by early 2024. This indicates that while the company achieved impressive economic profit in some years, there is considerable volatility with a sharp decrease in the most recent year.

Economic Profit Margin

The economic profit margin correlates with the trends observed in economic profit. It remained stable at 2.7% in 2019 and 2020, then increased significantly to a high of 5.02% in 2023 after a slight dip in 2022. Despite the steady rise and high margin years, the margin saw a substantial decline to 1.64% in 2024, the lowest in the observed span. This suggests that despite revenue growth, profitability efficiency as measured by economic profit margin has decreased sharply recently.

In summary, the company has demonstrated strong revenue growth over the period under review. However, the performance in terms of economic profit and its margin has been more volatile, culminating in a significant drop in economic profitability in the latest reported year. This divergence may warrant further investigation into cost management, operational efficiency, or other factors influencing profitability despite increasing sales.