Home Depot Inc. (NYSE:HD)

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibited a general upward trend from 2020 to 2022, increasing from 12,860 million USD to 18,148 million USD. It remained relatively stable in 2023 with a slight increase to 18,170 million USD. However, in 2024, there was a noticeable decline to 16,384 million USD, followed by a modest recovery in 2025 reaching 16,730 million USD.

Cost of Capital

The cost of capital showed a gradual increase from 12.93% in 2020 to a peak of 13.64% in 2024, before slightly decreasing to 13.36% in 2025. The fluctuations remained within a narrow range, indicating relatively stable capital costs over the period.

Invested Capital

The invested capital demonstrated substantial growth, rising from 36,678 million USD in 2020 to 72,841 million USD in 2025. The most significant increases occurred between 2020 and 2021, and then again between 2024 and 2025, indicating ongoing expansion or reinvestment in the business.

Economic Profit

Economic profit followed a fluctuating pattern, with an initial decline from 8,116 million USD in 2020 to 7,483 million USD in 2021. This was followed by a strong recovery over the next two years, peaking at 11,662 million USD in 2022 and slightly decreasing to 10,837 million USD in 2023. After 2023, economic profit declined steadily to 7,000 million USD by 2025. This trend suggests profitability challenges in recent years despite earlier gains.

Overall Analysis

Over the examined period, the company experienced growth in both NOPAT and invested capital, reflecting expansion and increased operational profits. Nonetheless, the decline in economic profit in the later years alongside a rising cost of capital suggests that the returns on new investments or overall efficiency may be diminishing. The stability in the cost of capital indicates consistent financing conditions, but the lower economic profit points to potential challenges in generating value above capital costs in the recent period.

Net Earnings

Net earnings exhibit an overall upward trend from the initial value of 11,242 million US dollars in the period ending February 2, 2020, reaching a peak of 17,105 million US dollars by January 29, 2023. However, after this peak, there is a noticeable decline, with net earnings decreasing to 15,143 million US dollars in January 28, 2024, and further slightly declining to 14,806 million US dollars by February 2, 2025.

Net Operating Profit After Taxes (NOPAT)

NOPAT shows an increasing pattern from 12,860 million US dollars in the period ending February 2, 2020, to reach 18,170 million US dollars as of January 29, 2023. Following this peak, there is a decline in the subsequent period to 16,384 million US dollars in January 28, 2024. However, unlike net earnings, NOPAT recovers slightly in the most recent period, increasing to 16,730 million US dollars by February 2, 2025.

Comparative Insights

Both net earnings and NOPAT follow a similar trend characterized by growth up to the period ending early 2023, followed by a reduction. The decline in net earnings is more consistent in the last two periods, whereas NOPAT experiences a partial recovery in the final period. This divergence could indicate changes in operational efficiency or tax impacts that warrant further examination. Overall, the data suggests a phase of growth culminating around 2023, with some signs of financial pressure or transitional changes in profitability thereafter.

The financial data reveals the trends in provision for income taxes and cash operating taxes over six consecutive years.

Provision for Income Taxes

From February 2020 to January 2021, the provision for income taxes increased significantly from 3,473 million US dollars to 4,112 million, representing a notable rise. This upward trend continued into January 2022, peaking at 5,304 million US dollars. However, in the following years, the provision began to decline slightly: decreasing to 5,372 million in January 2023, then further reducing to 4,781 million in January 2024, and ending at 4,600 million in February 2025. Overall, after an initial sharp rise through 2022, the provision for income taxes demonstrated a downward adjustment over the last three years in the dataset.

Cash Operating Taxes

Cash operating taxes showed a strong upward movement from 3,573 million US dollars in February 2020 to 5,040 million in January 2021. This increase continued into January 2022 with another rise to 5,876 million. The following year, January 2023, registered a slight decrease to 5,622 million, which continued with marginal declines in subsequent years: 5,482 million in January 2024 and 5,201 million in February 2025. This pattern indicates that after reaching a peak in early 2022, cash operating taxes began to taper moderately but remained considerably higher than the initial 2020 values.

In summary, both provision for income taxes and cash operating taxes experienced significant growth from 2020 through early 2022, indicating increased tax-related expenses or obligations during this period. Post-2022, both metrics showed a gradual decline, potentially reflecting changes in taxable income, tax strategies, or regulatory impacts. The consistent higher levels from 2021 onwards compared to 2020 suggest an overall increase in tax burden or profitability subject to tax over the six-year span.

The financial data reveals several notable trends in the company’s capital structure and financial position over the observed periods.

Total reported debt & leases

This figure exhibits a consistent upward trend throughout the periods, increasing from $37,377 million in early 2020 to $62,290 million by early 2025. The rise indicates a growing reliance on debt and lease obligations, which increased by nearly 67% over the five-year span.

Stockholders’ equity (deficit)

Stockholders’ equity fluctuates significantly, starting with a negative position of -$3,116 million in early 2020 and improving to a positive $3,299 million by early 2021. However, it swings back to a negative figure in early 2022 at -$1,696 million, before gradually increasing again to reach $6,640 million by early 2025. This volatility suggests periods of financial strain or restructuring, followed by recovery phases, ultimately resulting in a strengthened equity base.

Invested capital

Invested capital shows an overall increasing pattern, beginning at $36,678 million in 2020, rising to $49,973 million in 2021, and experiencing some fluctuations before reaching a peak of $72,841 million in 2025. This growth reflects increased capital deployment, possibly through investments, acquisitions, or asset expansion aligning with the rise in debt levels.

In summary, the company appears to have expanded its capital base and debt load significantly over the period, while stockholders’ equity demonstrated volatility but ultimately improved. The overall increase in invested capital alongside growing debt indicates a strategy of leveraging to finance growth or operations, which has enhanced the total resources employed in the business.

Economic Profit

The economic profit exhibited variability over the examined periods. Starting at 8,116 million US dollars in early 2020, it declined to 7,483 million in 2021 before rising sharply to a peak of 11,662 million in 2022. Subsequently, a downward trend was observed with values dropping to 10,837 million in 2023, 8,762 million in 2024, and further declining to 7,000 million by early 2025. This pattern suggests fluctuating profitability with a notable peak in 2022 followed by a consistent reduction thereafter.

Invested Capital

Invested capital showed a general upward trend throughout the reported periods. It started at 36,678 million US dollars in 2020 and experienced significant growth to 49,973 million in 2021. There was a slight decrease noted in 2022 to 48,299 million before rising again to 55,111 million in 2023 and 55,884 million in 2024. The latest figure in 2025 revealed a substantial increase to 72,841 million. Overall, this indicates a steady increase in the capital base, with a minor dip in 2022, followed by accelerated growth in the later years.

Economic Spread Ratio

The economic spread ratio fluctuated notably across the periods under review. Beginning at 22.13% in 2020, it decreased significantly to 14.97% in 2021, then increased sharply to 24.15% in 2022. Following this peak, the ratio declined to 19.66% in 2023 and continued its downward trajectory to 15.68% in 2024 and 9.61% in 2025. This trend suggests a diminishing return on invested capital relative to cost of capital over time, particularly in the most recent years.

Overall Observations

The data reveals a scenario where invested capital has been growing steadily, especially in the last reported period, while economic profit has experienced volatility and has declined after its peak in 2022. Concurrently, the economic spread ratio's decline toward 2025 signals decreasing efficiency in generating economic profit from the invested capital. This might reflect increased capital costs, lower profitability margins, or other operational challenges impacting return on investment.

The financial data indicates several notable trends over the observed periods.

Economic Profit

The economic profit demonstrates a fluctuating pattern. It decreased from 8,116 million US dollars in 2020 to 7,483 million in 2021, followed by a substantial increase to 11,662 million in 2022. Subsequently, economic profit declined again to 10,837 million in 2023, and continued to decrease in 2024 and 2025, reaching 7,000 million. This suggests overall volatility with a peak in 2022 but a general downward trend after that year.

Adjusted Net Sales

Adjusted net sales show a consistent upward trajectory throughout the periods. Starting from 110,559 million US dollars in 2020, sales grew each year, reaching 159,362 million by 2025. This steady increase indicates strong revenue growth and market expansion or price increases over time.

Economic Profit Margin

The economic profit margin, expressed as a percentage, reveals a declining trend despite fluctuations in economic profit values. It dropped from 7.34% in 2020 to 5.63% in 2021, then peaked at 7.68% in 2022 before falling continuously to 4.39% in 2025. The declining margin despite rising sales suggests profitability pressures, possibly due to increased costs or less efficient capital usage.

In summary, while adjusted net sales increased consistently, the economic profit and its margin exhibited volatility with an overall downward trend after 2022. This indicates that although sales growth was strong, economic returns and profit efficiency faced challenges in the latter periods.