Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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Economic Profit
Lockheed Martin Corp., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The analysis of the financial performance over the indicated periods reveals several important trends regarding profitability and capital efficiency.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT displayed a declining trend from 2020 through 2022, dropping from 7,202 million USD in 2020 to 5,745 million USD in 2022. There was a recovery in 2023, rising to 6,983 million USD, followed by another decrease in 2024 to 5,464 million USD. This pattern indicates variability in operational profitability, with notable recovery attempts that were not sustained by the end of the period.
- Cost of Capital
- The cost of capital remained relatively stable throughout the period, fluctuating slightly between 8.56% and 8.80%. This stability suggests consistent market conditions or stable risk profiles associated with the capital employed over the analyzed years.
- Invested Capital
- Invested capital showed minor fluctuations. It increased from 28,054 million USD in 2020 to a peak of 28,784 million USD in 2024, with a dip to 26,603 million USD in 2022 before rising again. The movement indicates adjustments in investment levels, possibly reflecting strategic shifts or capital allocation decisions.
- Economic Profit
- Economic profit followed a trend similar to NOPAT, initially declining from 4,801 million USD in 2020 to 3,404 million USD in 2022. It rebounded in 2023 to 4,614 million USD but then decreased to 2,992 million USD in 2024. The fluctuations in economic profit reflect changes in value creation after accounting for the cost of capital, with a noticeable reduction in value generation by the end of the period.
In summary, while there were interim recoveries in both operational profitability and economic profit, the overall trend across the analyzed years points to a decline in profitability and value creation by 2024. Stability in the cost of capital suggests external cost conditions were consistent, but the shifts in invested capital and profitability metrics indicate internal operational and investment factors influenced the financial outcomes during this period.
Net Operating Profit after Taxes (NOPAT)
Lockheed Martin Corp., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in equity equivalents to net earnings.
3 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
4 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
5 Addition of after taxes interest expense to net earnings.
6 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
7 Elimination of after taxes investment income.
8 Elimination of discontinued operations.
- Net Earnings
- The net earnings demonstrate a fluctuating trend over the reported periods. Initially, there is a decrease from 6,833 million USD in 2020 to 6,315 million USD in 2021, followed by a further decline to 5,732 million USD in 2022. However, a recovery is observed in 2023 with net earnings rising to 6,920 million USD. In 2024, the net earnings again decline to 5,336 million USD. Overall, the net earnings exhibit volatility with no consistent upward or downward pattern.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT values mirror the pattern seen in net earnings, suggesting a close relationship between operating profitability and net results. It starts at 7,202 million USD in 2020 and decreases steadily to 6,442 million USD in 2021 and 5,745 million USD in 2022. Similar to net earnings, NOPAT increases in 2023 to 6,983 million USD, then declines in 2024 to 5,464 million USD. This pattern indicates variations in operational efficiency and profitability impacting after-tax operating profit.
Cash Operating Taxes
Lockheed Martin Corp., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Federal and foreign income tax expense
- The federal and foreign income tax expense shows a fluctuating downward trend over the five-year period. Starting at 1,347 million US dollars in 2020, it decreased to 1,235 million in 2021 and further declined to 948 million in 2022. There was a slight recovery to 1,178 million in 2023, followed by another decline to 884 million in 2024. Overall, the tax expense decreased notably from 2020 to 2024, indicating potential changes in income levels, tax rates, or tax planning strategies.
- Cash operating taxes
- The cash operating taxes exhibit a clear upward trend for the initial three years, increasing from 1,424 million US dollars in 2020 to a peak of 1,910 million in 2022. Post-2022, there is a declining trend with amounts falling to 1,825 million in 2023 and further to 1,662 million in 2024. Despite the recent decreases, the overall level of cash operating taxes in 2024 remains higher than in 2020, suggesting higher operational tax outflows over the medium term, possibly due to increased taxable income or changes in tax payment schedules.
Invested Capital
Lockheed Martin Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of equity equivalents to stockholders’ equity.
4 Removal of accumulated other comprehensive income.
5 Subtraction of construction in progress.
6 Subtraction of marketable securities.
- Total Reported Debt & Leases
-
The total reported debt and leases demonstrate a consistent upward trend over the analyzed period. Starting at 13,284 million USD in 2020, the amount slightly decreased to 13,076 million USD in 2021 but then increased significantly to 16,764 million USD in 2022. This growth continued in subsequent years, reaching 18,636 million USD in 2023 and further rising to 21,418 million USD by the end of 2024. This pattern indicates an increasing reliance on debt and leases as a component of the company’s financial structure.
- Stockholders’ Equity
-
Stockholders’ equity showed volatility during the reviewed timeframe. The value grew substantially from 6,015 million USD in 2020 to a peak of 10,959 million USD in 2021. However, a decline followed, dropping to 9,266 million USD in 2022. The downward trend persisted in 2023 and 2024, with equity decreasing further to 6,835 million USD and 6,333 million USD respectively. The decrease after 2021 suggests potential challenges in retained earnings or other equity components, affecting the company’s net worth from the shareholders’ perspective.
- Invested Capital
-
Invested capital fluctuated over the period under consideration. It started at 28,054 million USD in 2020, marginally increasing to 28,620 million USD in 2021. This was followed by a decline to 26,603 million USD in 2022, then a modest recovery to 27,427 million USD in 2023 and a subsequent increase to 28,784 million USD in 2024. The invested capital trend overall appears relatively stable with minor fluctuations, indicating ongoing capital investment activities that align with the company’s operational and strategic initiatives.
- Summary Observations
-
Overall, the financial data reveals a notable increase in leverage, with debt and leases rising considerably over the five years, potentially increasing financial risk. Meanwhile, stockholders’ equity exhibited significant growth initially but suffered a steady decline after 2021, which may signal profitability or capital structure concerns. Invested capital remained comparatively stable, suggesting consistent reinvestment in the company’s asset base despite the observed fluctuations. These patterns might reflect strategic decisions affecting financial policy, capital structure, and risk management.
Cost of Capital
Lockheed Martin Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Lockheed Martin Corp., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data reveals several noteworthy trends across the five-year period under review. The economic profit demonstrates variability, initially declining from 4,801 million in 2020 to 3,404 million in 2022. This downward trend is followed by a partial recovery in 2023, reaching 4,614 million, and subsequently declining again to 2,992 million in 2024. This pattern indicates fluctuating profitability performance, with the most recent year showing a marked decline compared to earlier periods.
Invested capital shows moderate fluctuations but remains relatively stable throughout the period. It increased slightly from 28,054 million in 2020 to 28,620 million in 2021, decreased to 26,603 million in 2022, then rose again to 28,427 million in 2023, and further increased to 28,784 million in 2024. This suggests a steady level of capital deployment with some year-to-year adjustments, but no dramatic changes in investment scale.
The economic spread ratio, which measures the return relative to the invested capital, follows a trajectory similar to economic profit. Starting at a high of 17.11% in 2020, it decreased steadily to 12.8% in 2022. In 2023, there was an improvement to 16.82%, approaching the initial high levels recorded at the beginning of the period. However, in 2024, the ratio dropped substantially to 10.4%, indicating pressure on the company's ability to generate returns on its capital base.
- Economic Profit
- Displayed volatility over the five-year period with a decline in the first three years, recovery in the fourth year, and a significant decrease in the final year.
- Invested Capital
- Remained relatively stable with minor fluctuations, indicating consistent capital deployment without large expansions or contractions.
- Economic Spread Ratio
- Mirrored the trend in economic profit, showing a general decline followed by a temporary recovery, then a sharp drop in the final year, suggesting challenges in maintaining return efficiency.
Overall, the trends suggest that while capital investment has been relatively steady, the company faces challenges in sustaining economic profit and return rates, especially evident in the latest year. The marked decreases in both economic profit and spread ratio in 2024 warrant further examination of operational or market factors impacting profitability.
Economic Profit Margin
Lockheed Martin Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Net sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial data reflects a mixed performance across the five-year period. Net sales show a generally positive trend, increasing from $65,398 million in 2020 to $71,043 million in 2024. This indicates steady revenue growth over the analyzed timeframe.
However, economic profit exhibits a fluctuating pattern. It starts at $4,801 million in 2020, declines over the next two years to $3,404 million in 2022, recovers in 2023 to $4,614 million, but then falls again to $2,992 million in 2024. Thus, while sales have increased, economic profit does not consistently follow the same upward trajectory, signaling potential challenges in profitability or cost management.
The economic profit margin further illustrates this volatility, decreasing from 7.34% in 2020 to 5.16% in 2022, recovering to 6.83% in 2023, and then dropping sharply to 4.21% in 2024. The decline in margin in the most recent year suggests that despite higher sales, the company is generating less economic profit relative to its sales, which may point to increased costs, reduced pricing power, or other operational issues.
- Net Sales
- Consistent growth from 2020 through 2024, indicating rising revenue.
- Economic Profit
- Experienced fluctuations with no clear upward trend, reflecting irregular profitability.
- Economic Profit Margin
- Declined overall with intermittent recovery, signaling downward pressure on profit efficiency relative to sales.