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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Lockheed Martin Corp. pages available for free this week:
- Balance Sheet: Assets
- Cash Flow Statement
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Net Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Price to Earnings (P/E) since 2005
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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
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT exhibits a fluctuating trend over the five-year period. It decreased from 7202 million USD in 2020 to 5745 million USD in 2022, indicating a decline over the first three years. In 2023, it recovered to 6983 million USD, followed by a substantial drop to 5464 million USD in 2024, reaching its lowest point within this timeframe.
- Cost of Capital
- The cost of capital remained relatively stable, oscillating marginally between 8.63% and 8.88% over the years. It slightly increased from 8.63% in 2020 to a peak of 8.88% in 2022, then decreased gradually to 8.66% by 2024, showing overall minimal volatility.
- Invested Capital
- The invested capital experienced moderate variation. After increasing from 28054 million USD in 2020 to 28620 million USD in 2021, it declined to 26603 million USD in 2022. This was followed by incremental rises in subsequent years, reaching 28784 million USD in 2024, which is the highest point recorded in the observed period.
- Economic Profit
- Economic profit showed a downward trend generally consistent with NOPAT's movement. It started at 4780 million USD in 2020, fell steadily to 3383 million USD in 2022, then rebounded to 4593 million USD in 2023, before declining sharply to 2971 million USD in 2024. Despite some recovery in 2023, the overall trend points to diminished economic profit over the 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.
- Economic Profit
- The economic profit demonstrates a fluctuating trend over the observed five-year period. It initially declines from $4,780 million in 2020 to $3,383 million in 2022, indicating a reduction in value created beyond the cost of capital. Subsequently, there is a notable recovery in 2023 with economic profit rising to $4,593 million, followed by a sharp decrease to $2,971 million in 2024.
- Invested Capital
- Invested capital exhibits moderate variability, remaining relatively stable overall. It shows a slight increase from $28,054 million in 2020 to $28,620 million in 2021, then declines to $26,603 million in 2022. Afterward, it rises again to $27,427 million in 2023 and further to $28,784 million in 2024, suggesting ongoing investment activity and periods of partial divestiture or asset turnover.
- Economic Spread Ratio
- The economic spread ratio, reflecting the spread between return on invested capital and cost of capital, follows a trend largely similar to economic profit. It decreases consistently from 17.04% in 2020 to 12.72% in 2022, implying tightening spreads and reduced economic profit margins. This is followed by a recovery to 16.75% in 2023, then a significant decline to 10.32% in 2024, which is the lowest in the five-year period, indicating increased pressure on the firm's economic profitability.
- Summary
- The overall data suggests that profitability, as indicated by economic profit and economic spread ratio, experienced a downturn until 2022, partial recovery in 2023, and a pronounced weakening in 2024. Invested capital has remained relatively stable with slight fluctuations, implying stable capital commitment with some adjustments. The declining economic spread ratio in 2024 particularly highlights challenges in generating returns above the cost of capital, which could signal operational or market pressures affecting economic value creation.
Economic Profit Margin
Lockheed Martin Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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.
- Economic Profit
- Economic profit exhibited a fluctuating trend over the observed period. It started at 4,780 million US dollars in 2020, then declined steadily to 3,926 million in 2021 and further to 3,383 million in 2022. A notable recovery occurred in 2023, with economic profit increasing to 4,593 million, followed by a significant drop to 2,971 million in 2024. Overall, the economic profit shows volatility with a downward tendency in the latest year.
- Net Sales
- Net sales showed a generally positive and steady growth trajectory across the five years. Beginning at 65,398 million US dollars in 2020, net sales increased modestly to 67,044 million in 2021, slightly declined to 65,984 million in 2022, then rose again to 67,571 million in 2023 and reached 71,043 million in 2024. Despite minor fluctuations, net sales demonstrated resilience and a clear upward movement overall.
- Economic Profit Margin
- The economic profit margin, expressed as a percentage, reflected a declining pattern over the period. It started at 7.31% in 2020, then decreased to 5.86% in 2021, and continued its downward trend to 5.13% in 2022. A partial recovery to 6.8% was observed in 2023, but the margin fell again sharply to 4.18% in 2024. This indicates declining profitability efficiency relative to sales in recent years, with a brief improvement in 2023.
- Summary
- The financial data reveals growth in net sales over the five-year span, signaling increasing market activity. However, economic profit and its margin demonstrate more volatility and a general downward trend, especially in the latest year. The divergence between rising sales and declining profitability margins suggests rising costs, pricing pressures, or other operational challenges impacting profitability despite increased revenue.