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.
Economic Profit
Lowe’s Cos. Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2026 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 8,308 – 14.69% × 36,866 = 2,892
Economic profit exhibited significant volatility over the analyzed six-year period, characterized by a peak in 2022 and a subsequent decline by 2026. While the organization consistently generated positive economic value, the magnitude of this value was heavily influenced by fluctuations in operating profitability and substantial changes in the capital base.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT experienced a sharp increase from 7,056 million in 2021 to a peak of 9,827 million in 2022. Following this peak, profitability declined to 7,020 million in 2023 before recovering to 8,789 million in 2024. The period concluded with relative stability, settling at 8,308 million by 2026.
- Cost of Capital
- The cost of capital remained relatively stable throughout the period, oscillating within a narrow range between 14.69% and 15.72%. A gradual downward trend is observed toward the end of the period, reaching a minimum of 14.69% in 2026.
- Invested Capital
- A contraction in invested capital occurred between 2021 and 2023, decreasing from 28,534 million to 24,710 million. This trend reversed in 2024, leading to a substantial escalation in 2026, where invested capital rose sharply to 36,866 million.
- Economic Profit Dynamics
- Economic profit peaked in 2022 at 5,693 million, driven by the simultaneous occurrence of record NOPAT and a reduced capital base. Although economic profit remained positive through 2026, a marked decline to 2,892 million was recorded in the final year. This erosion of economic value is primarily attributed to the significant expansion of invested capital, which increased the total capital charge and offset the stability of operating profits.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Net Operating Profit after Taxes (NOPAT)
Lowe’s Cos. Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in deferred revenue.
3 Addition of increase (decrease) in equity equivalents to net earnings.
4 2026 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 4,756 × 4.43% = 211
5 2026 Calculation
Tax benefit of interest expense, net of amount capitalized = Adjusted interest expense, net of amount capitalized × Statutory income tax rate
= 1,738 × 21.00% = 365
6 Addition of after taxes interest expense to net earnings.
7 2026 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 121 × 21.00% = 25
8 Elimination of after taxes investment income.
Net operating profit after taxes (NOPAT) exhibited a generally positive trajectory over the observed period, though with some fluctuation. Initial values demonstrate growth followed by a period of decline and subsequent stabilization. A comparison with net earnings reveals distinct patterns in profitability.
- Overall NOPAT Trend
- NOPAT increased from US$7,056 million in January 2021 to a peak of US$9,827 million in January 2022, representing a substantial year-over-year increase. Following this peak, NOPAT decreased to US$7,020 million in February 2023, nearly returning to the level observed in 2021. A subsequent recovery occurred, with NOPAT reaching US$8,789 million in February 2024. The trend then moderates, with values of US$8,137 million and US$8,308 million reported for January 2025 and January 2026, respectively.
- NOPAT vs. Net Earnings
- While both NOPAT and net earnings generally moved in the same direction, the magnitude of change differed. The increase from 2021 to 2022 was more pronounced for net earnings (44.5% increase) than for NOPAT (39.3% increase). Conversely, the decline from 2022 to 2023 was more significant for net earnings (23.8% decrease) than for NOPAT (3.1% decrease). This divergence suggests that factors beyond core operating profitability, such as financing costs or non-operating items, significantly impacted net earnings.
- Recent Performance
- The most recent two years (January 2025 and January 2026) show a relatively stable NOPAT, fluctuating within a narrow range of US$8,137 million to US$8,308 million. This suggests a potential plateauing of operating profitability or a balancing of offsetting factors affecting NOPAT.
In summary, NOPAT demonstrated initial strong growth, followed by a correction, and then a period of stabilization. The relationship between NOPAT and net earnings indicates that non-operating factors play a role in overall profitability.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Cash Operating Taxes
Lowe’s Cos. Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
The income tax provision and cash operating taxes exhibited fluctuating behavior over the observed period. Both metrics initially increased before demonstrating a subsequent decline.
- Income Tax Provision
- The income tax provision increased from US$1,904 million in 2021 to US$2,766 million in 2022, representing a substantial rise. This was followed by a decrease to US$2,599 million in 2023 and a further reduction to US$2,449 million in 2024. The trend continued with a decline to US$2,196 million in 2025 and US$2,093 million in 2026. This indicates a consistent downward trend in reported income tax provision over the latter half of the period.
- Cash Operating Taxes
- Cash operating taxes mirrored the general trend of the income tax provision. An increase was observed from US$2,217 million in 2021 to US$2,847 million in 2022. The value peaked at US$3,055 million in 2023 before decreasing to US$2,771 million in 2024. Further declines were recorded in 2025 (US$2,501 million) and 2026 (US$2,169 million), demonstrating a consistent reduction in cash taxes paid.
- Relationship between Metrics
- Cash operating taxes consistently exceeded the income tax provision throughout the entire period. The difference between the two metrics remained relatively stable, fluctuating between approximately US$300 million and US$400 million annually. This suggests that timing differences related to tax payments and accruals are a consistent feature of the company’s tax position.
- Overall Trend
- From 2022 to 2026, both the income tax provision and cash operating taxes experienced a net decrease. The rate of decline appeared to accelerate in the later years of the period, particularly from 2024 to 2026. This could be attributable to changes in tax laws, improved tax planning strategies, or shifts in the company’s profitability and taxable income.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Invested Capital
Lowe’s Cos. Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of deferred revenue.
4 Addition of equity equivalents to shareholders’ equity (deficit).
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of investments.
The reported invested capital demonstrates fluctuations over the observed period. Initially, a decrease is noted, followed by a period of relative stability, and then a significant increase towards the end of the timeframe. A closer examination of the components contributing to invested capital reveals key trends in the company’s financial structure.
- Total Debt & Leases
- Total reported debt and leases exhibits a consistent upward trajectory from 2021 to 2024, increasing from US$26,211 million to US$40,145 million. A slight decrease is observed in 2025 to US$39,678 million, but this is followed by a further increase to US$44,677 million in 2026. This suggests an increasing reliance on debt financing over the period.
- Shareholders’ Equity
- Shareholders’ equity experiences a substantial decline throughout the period. Beginning with a positive value of US$1,437 million in 2021, it transitions to a deficit by 2022, reaching a deficit of US$4,816 million. This negative trend continues, with the deficit deepening to US$15,050 million in 2024, before a modest improvement to a deficit of US$9,917 million in 2026. This indicates a consistent erosion of equity value.
- Invested Capital Trend
- Invested capital decreased from US$28,534 million in 2021 to US$24,710 million in 2023. It then stabilized, fluctuating between US$25,913 million and US$26,276 million in 2024 and 2025, respectively. A notable increase is observed in 2026, with invested capital rising to US$36,866 million. This final increase appears to be driven primarily by the increase in total debt and leases, offsetting the continued negative shareholders’ equity.
The interplay between debt and equity significantly influences the invested capital. The increasing debt levels, coupled with the declining shareholders’ equity, initially resulted in a decrease in invested capital. However, the substantial increase in debt in the later years ultimately drove the overall invested capital higher, despite the continued equity deficit. This pattern suggests a shift in the company’s capital structure towards greater debt financing.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Cost of Capital
Lowe’s Cos. Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 131,195) | 131,195) | ÷ | 173,249) | = | 0.76 | 0.76 | × | 18.36% | = | 13.90% | ||
| Debt3 | 37,298) | 37,298) | ÷ | 173,249) | = | 0.22 | 0.22 | × | 4.06% × (1 – 21.00%) | = | 0.69% | ||
| Operating lease liability4 | 4,756) | 4,756) | ÷ | 173,249) | = | 0.03 | 0.03 | × | 4.43% × (1 – 21.00%) | = | 0.10% | ||
| Total: | 173,249) | 1.00 | 14.69% | ||||||||||
Based on: 10-K (reporting date: 2026-01-30).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 130,350) | 130,350) | ÷ | 166,574) | = | 0.78 | 0.78 | × | 18.36% | = | 14.37% | ||
| Debt3 | 32,033) | 32,033) | ÷ | 166,574) | = | 0.19 | 0.19 | × | 3.97% × (1 – 21.00%) | = | 0.60% | ||
| Operating lease liability4 | 4,191) | 4,191) | ÷ | 166,574) | = | 0.03 | 0.03 | × | 4.28% × (1 – 21.00%) | = | 0.09% | ||
| Total: | 166,574) | 1.00 | 15.06% | ||||||||||
Based on: 10-K (reporting date: 2025-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 145,335) | 145,335) | ÷ | 182,827) | = | 0.79 | 0.79 | × | 18.36% | = | 14.60% | ||
| Debt3 | 33,268) | 33,268) | ÷ | 182,827) | = | 0.18 | 0.18 | × | 3.96% × (1 – 21.00%) | = | 0.57% | ||
| Operating lease liability4 | 4,224) | 4,224) | ÷ | 182,827) | = | 0.02 | 0.02 | × | 4.11% × (1 – 21.00%) | = | 0.08% | ||
| Total: | 182,827) | 1.00 | 15.24% | ||||||||||
Based on: 10-K (reporting date: 2024-02-02).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 113,624) | 113,624) | ÷ | 148,912) | = | 0.76 | 0.76 | × | 18.36% | = | 14.01% | ||
| Debt3 | 31,254) | 31,254) | ÷ | 148,912) | = | 0.21 | 0.21 | × | 3.86% × (1 – 21.00%) | = | 0.64% | ||
| Operating lease liability4 | 4,034) | 4,034) | ÷ | 148,912) | = | 0.03 | 0.03 | × | 3.78% × (1 – 21.00%) | = | 0.08% | ||
| Total: | 148,912) | 1.00 | 14.73% | ||||||||||
Based on: 10-K (reporting date: 2023-02-03).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 150,571) | 150,571) | ÷ | 181,324) | = | 0.83 | 0.83 | × | 18.36% | = | 15.25% | ||
| Debt3 | 26,096) | 26,096) | ÷ | 181,324) | = | 0.14 | 0.14 | × | 3.53% × (1 – 21.00%) | = | 0.40% | ||
| Operating lease liability4 | 4,657) | 4,657) | ÷ | 181,324) | = | 0.03 | 0.03 | × | 3.59% × (1 – 21.00%) | = | 0.07% | ||
| Total: | 181,324) | 1.00 | 15.72% | ||||||||||
Based on: 10-K (reporting date: 2022-01-28).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 130,462) | 130,462) | ÷ | 159,901) | = | 0.82 | 0.82 | × | 18.36% | = | 14.98% | ||
| Debt3 | 25,008) | 25,008) | ÷ | 159,901) | = | 0.16 | 0.16 | × | 3.74% × (1 – 21.00%) | = | 0.46% | ||
| Operating lease liability4 | 4,431) | 4,431) | ÷ | 159,901) | = | 0.03 | 0.03 | × | 3.88% × (1 – 21.00%) | = | 0.08% | ||
| Total: | 159,901) | 1.00 | 15.53% | ||||||||||
Based on: 10-K (reporting date: 2021-01-29).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Lowe’s Cos. Inc., economic spread ratio calculation, comparison to benchmarks
| Jan 30, 2026 | Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 2,892) | 4,181) | 4,840) | 3,380) | 5,693) | 2,625) | |
| Invested capital2 | 36,866) | 26,276) | 25,913) | 24,710) | 26,296) | 28,534) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 7.85% | 15.91% | 18.68% | 13.68% | 21.65% | 9.20% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Amazon.com Inc. | — | -1.49% | -5.13% | -10.66% | -21.61% | -1.84% | |
| Home Depot Inc. | 4.63% | 6.89% | 12.88% | 16.94% | 21.39% | 12.23% | |
| TJX Cos. Inc. | 8.34% | 7.41% | 7.14% | 4.20% | 4.22% | -12.63% | |
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 Economic profit. See details »
2 Invested capital. See details »
3 2026 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,892 ÷ 36,866 = 7.85%
4 Click competitor name to see calculations.
The analysis of the economic value added metrics reveals a period of significant volatility in profitability and capital efficiency, characterized by a peak in performance in 2022 followed by a contraction in the economic spread ratio by 2026.
- Economic Spread Ratio Trends
- The economic spread ratio experienced substantial fluctuations over the observed period. After starting at 9.20% in January 2021, the ratio surged to a peak of 21.65% by January 2022. Although a recovery to 18.68% occurred in February 2024, a consistent downward trajectory followed, culminating in a period low of 7.85% in January 2026. This volatility indicates inconsistent margins over the cost of capital.
- Economic Profit Analysis
- Economic profit mirrored the volatility seen in the spread ratio, reaching its highest point of US$ 5,693 million in January 2022. A sharp decline to US$ 3,380 million was recorded in February 2023, followed by a moderate recovery to US$ 4,840 million in February 2024. However, profitability declined in the subsequent years, ending at US$ 2,892 million in January 2026, representing a significant reduction from the 2022 peak.
- Invested Capital Dynamics
- Invested capital trended downward from January 2021 (US$ 28,534 million) to a low of US$ 24,710 million in February 2023. Capital levels remained relatively stable through January 2025; however, a substantial increase occurred in January 2026, where invested capital rose sharply to US$ 36,866 million. This surge in capital expenditure or financing coincided with the lowest economic spread ratio of the period, suggesting that the additional capital deployed did not yield proportional increases in economic profit.
The correlation between the sharp increase in invested capital and the decline in both economic profit and the economic spread ratio in the final period suggests a decrease in capital efficiency. The expansion of the capital base in January 2026 appears to have diluted the economic spread, resulting in the lowest value of value creation relative to invested capital within the analyzed timeframe.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Economic Profit Margin
Lowe’s Cos. Inc., economic profit margin calculation, comparison to benchmarks
| Jan 30, 2026 | Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 2,892) | 4,181) | 4,840) | 3,380) | 5,693) | 2,625) | |
| Net sales | 86,286) | 83,674) | 86,377) | 97,059) | 96,250) | 89,597) | |
| Add: Increase (decrease) in deferred revenue | 113) | (7) | (171) | (237) | 414) | 514) | |
| Adjusted net sales | 86,399) | 83,667) | 86,206) | 96,822) | 96,664) | 90,111) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 3.35% | 5.00% | 5.61% | 3.49% | 5.89% | 2.91% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Amazon.com Inc. | — | -0.99% | -3.00% | -6.01% | -11.28% | -0.79% | |
| Home Depot Inc. | 2.31% | 3.15% | 4.72% | 5.95% | 6.80% | 4.60% | |
| TJX Cos. Inc. | 3.46% | 2.97% | 2.78% | 1.72% | 1.71% | -8.79% | |
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 Economic profit. See details »
2 2026 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × 2,892 ÷ 86,399 = 3.35%
3 Click competitor name to see calculations.
An analysis of the economic value creation indicates a period of significant volatility between January 2021 and January 2026. The overall trend is characterized by a sharp peak in economic performance during 2022, followed by a fluctuating trajectory that concludes with a downward trend in both absolute economic profit and margin efficiency.
- Economic Profit Trends
- Economic profit exhibited substantial variance over the six-year period. A rapid increase is observed from 2,625 million US dollars in January 2021 to a peak of 5,693 million US dollars in January 2022. This was followed by a correction to 3,380 million US dollars in 2023, and a subsequent recovery to 4,840 million US dollars in 2024. However, a consistent decline is noted in the final two years, with profit falling to 4,181 million US dollars in 2025 and further decreasing to 2,892 million US dollars by January 2026.
- Adjusted Net Sales Performance
- Revenue patterns show a growth phase followed by contraction. Adjusted net sales rose from 90,111 million US dollars in 2021 to a peak of 96,822 million US dollars in February 2023. A downward trend emerged thereafter, with sales dropping to 83,667 million US dollars by January 2025. A slight recovery is observed in January 2026, where sales increased to 86,399 million US dollars, although this level remains below the 2021-2023 benchmarks.
- Economic Profit Margin Analysis
- The economic profit margin reflects the efficiency of value generation relative to sales. The margin expanded from 2.91% in 2021 to a high of 5.89% in 2022. After a dip to 3.49% in 2023, the margin strengthened again to 5.61% in 2024. A steady erosion of this margin is evident in the subsequent periods, declining to 5.00% in 2025 and ending at 3.35% in 2026. The correlation between the margin and absolute economic profit suggests that the decline in value creation is driven by both fluctuating sales volumes and a reduction in the profitability of those sales.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?