Economic Value Added (EVA)
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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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Lowe’s Cos. Inc. pages available for free this week:
- Income Statement
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Debt
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Economic Profit
Lowe’s Cos. Inc., economic profit calculation
US$ in millions
| 12 months ended: | Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | |
|---|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | |||||||
| Cost of capital2 | |||||||
| Invested capital3 | |||||||
| Economic profit4 | |||||||
Based on: 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), 10-K (reporting date: 2020-01-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net operating profit after taxes (NOPAT)
- The NOPAT values exhibit a general upward trend from 2020 to 2022, increasing from 5,097 million US dollars to 9,827 million US dollars. However, there is a noticeable decline in 2023 to 7,020 million US dollars, followed by a recovery in 2024 to 8,789 million US dollars, and a slight decrease again in 2025 to 8,137 million US dollars. This pattern suggests volatility in operating profitability over the recent years.
- Cost of capital
- The cost of capital has fluctuated mildly within a range of approximately 11.68% to 13.79% over the examined period. It increased from 11.68% in 2020 to a peak of 13.79% in 2022, then slightly declined to 12.96% in 2023 before rising again moderately in the subsequent years, ending at 13.24% in 2025. This indicates relative stability in capital costs with some cyclical variation.
- Invested capital
- Invested capital showed a moderate increase from 26,717 million US dollars in 2020 to 28,534 million US dollars in 2021. Subsequently, it decreased steadily through 2022, 2023, and 2024, reaching 24,710 million US dollars in 2023 and subsequently recovering slightly to 26,276 million US dollars by 2025. This trend reflects fluctuations in the assets employed to generate returns, possibly due to changes in asset management or capital deployment strategies.
- Economic profit
- Economic profit experienced strong growth from 1,977 million US dollars in 2020 to a peak of 6,201 million US dollars in 2022. This was followed by a decline to 3,818 million US dollars in 2023, an increase to 5,318 million US dollars in 2024, and a subsequent decrease to 4,659 million US dollars in 2025. These movements mirror the trends in NOPAT but also highlight the interaction with the cost of capital and invested capital, suggesting variations in value creation over time.
Net Operating Profit after Taxes (NOPAT)
Lowe’s Cos. Inc., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-01-31).
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 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2025 Calculation
Tax benefit of interest expense, net of amount capitalized = Adjusted interest expense, net of amount capitalized × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net earnings.
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
- Net Earnings
- The net earnings of the company demonstrated a significant upward trend from 2020 to 2022, rising from 4,281 million US dollars to 8,442 million US dollars. This almost doubled the net earnings within a two-year period, indicating robust profitability. However, in 2023, there was a noticeable decline to 6,437 million US dollars, followed by a partial recovery in 2024 to 7,726 million US dollars. The most recent data for 2025 shows a decrease again to 6,957 million US dollars, suggesting some volatility or challenges impacting net earnings in the latter period.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT figures align with the general trend observed in net earnings. Starting at 5,097 million US dollars in 2020, NOPAT increased steadily through 2021 and peaked at 9,827 million US dollars in 2022. This indicates improved operational efficiency and profitability. Following the peak, NOPAT decreased to 7,020 million US dollars in 2023, then rose again to 8,789 million US dollars in 2024, before declining to 8,137 million US dollars in 2025. Although the fluctuations in NOPAT mirror those in net earnings, the values still reflect a relatively strong operating performance over the years.
Cash Operating Taxes
Lowe’s Cos. Inc., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-01-31).
The data reflects the annual figures for income tax provision and cash operating taxes over a six-year period. Both financial items show a general upward trend from 2020 to 2023, followed by a noticeable decline in the later years.
- Income Tax Provision
- The income tax provision increased significantly from 1,342 million USD in 2020 to a peak of 2,766 million USD in 2022. After 2022, the provision declined steadily to 2,196 million USD by 2025. This pattern suggests a rise in taxable income or tax liabilities initially, followed by effective tax management or reduced taxable income in the later years.
- Cash Operating Taxes
- Cash operating taxes also exhibit consistent growth, increasing from 1,386 million USD in 2020 to a peak of 3,055 million USD in 2023. Post-2023, these taxes decreased to 2,501 million USD by 2025. This trend aligns closely with the income tax provision pattern, indicating cash tax payments followed similar dynamics, perhaps influenced by timing differences or changes in tax regulations.
Overall, the data shows strong growth in tax-related expenses through early years, peaking around 2022-2023, with subsequent reductions suggesting strategic tax planning, fluctuations in earnings, or changes in tax rules that impacted both provision and cash taxes similarly.
Invested Capital
Lowe’s Cos. Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2020-01-31).
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 financial data reveals several notable trends over the periods analyzed. One prominent pattern is the consistent increase in total reported debt and leases from 23,750 million US dollars in early 2020 to a peak of 40,145 million US dollars in early 2024, followed by a slight reduction to 39,678 million US dollars in early 2025. This indicates a significant rise in the company's leverage over the five-year period, particularly between 2021 and 2024.
Shareholders' equity shows a concerning downward trajectory, decreasing from 1,972 million US dollars in early 2020 to a negative value starting in 2022. The deficit deepens sharply from -4,816 million US dollars in early 2022 to a low point around -15,050 million US dollars in early 2024, with a minor improvement to -14,231 million US dollars in early 2025. This negative equity position suggests substantial accumulated losses or other equity-reducing events, which may impact the company’s financial stability and shareholder confidence.
Invested capital fluctuates throughout the period, starting at 26,717 million US dollars in early 2020 and peaking at 28,534 million US dollars in early 2021. Subsequently, it declines to a low of 24,710 million US dollars in early 2023 before gradually increasing again to 26,276 million US dollars by early 2025. These movements reflect variations in the company’s long-term investments and financing structure, possibly influenced by the changes in debt and equity.
- Total Reported Debt & Leases
- Shows a strong upward trend from 2020 through 2024, increasing by approximately 69%, followed by a slight decrease in 2025.
- Shareholders’ Equity (Deficit)
- Transitions from positive equity into a growing deficit starting in 2022, with the deficit nearly tripling by 2024 and remaining substantial in 2025.
- Invested Capital
- Peaks in 2021, declines through 2023, then recovers modestly by 2025, suggesting adjustments in capital investment and financing.
Overall, the company exhibits increasing financial leverage and deteriorating equity over the analyzed period, which may reflect operational challenges, increased borrowing, or sustained losses. The minor recovery in invested capital in the later periods could indicate attempts to stabilize or improve financial structure. Close attention to the relationship between debt levels and equity is warranted to assess ongoing financial health and risk exposure.
Cost of Capital
Lowe’s Cos. Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-02-02).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-02-03).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-01-28).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-01-29).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Lowe’s Cos. Inc., economic spread ratio calculation, comparison to benchmarks
| Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| Economic spread ratio3 | |||||||
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Amazon.com Inc. | |||||||
| Home Depot Inc. | |||||||
| TJX Cos. Inc. | |||||||
Based on: 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), 10-K (reporting date: 2020-01-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- Economic profit demonstrates notable fluctuations over the examined periods. Starting at $1,977 million in early 2020, it increased significantly to $3,166 million in 2021 and further surged to $6,201 million in 2022. However, a decline occurred in 2023, with economic profit falling to $3,818 million, followed by a rise to $5,318 million in 2024 and a subsequent decrease to $4,659 million in 2025. The overall trend suggests volatility with a peak in 2022 and partial recovery thereafter.
- Invested Capital
- Invested capital exhibits a general downward trend from 2020 to 2023, decreasing from $26,717 million to $24,710 million. This downward trajectory reversed slightly in 2024 and 2025, with invested capital rising to $25,913 million and $26,276 million respectively, nearly returning to initial levels recorded in 2020. This pattern indicates a period of capital reduction followed by stabilization and modest growth in recent years.
- Economic Spread Ratio
- The economic spread ratio shows a substantial increase from 7.4% in 2020 to 11.1% in 2021 and a pronounced peak at 23.58% in 2022. Following this peak, the ratio declined to 15.45% in 2023, then improved to 20.52% in 2024 before decreasing slightly again to 17.73% in 2025. The ratio's behavior reflects changing efficiency or return characteristics on invested capital, with the highest profitability achieved in 2022 and subsequent periods demonstrating relative but lower economic spreads.
- Overall Insights
- The data reveal a period of strong economic profit growth leading up to 2022, accompanied by an increasing economic spread ratio, highlighting improved profitability and capital utilization. The following years show a correction phase with diminished economic profit and spread ratios, although values remain above the initial levels of 2020. Invested capital trends suggest strategic adjustments, initially reducing investment before stabilizing. Together, these patterns may reflect responses to market conditions or internal operational changes affecting profitability and capital efficiency.
Economic Profit Margin
Lowe’s Cos. Inc., economic profit margin calculation, comparison to benchmarks
| Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | |||||||
| Net sales | |||||||
| Add: Increase (decrease) in deferred revenue | |||||||
| Adjusted net sales | |||||||
| Performance Ratio | |||||||
| Economic profit margin2 | |||||||
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Amazon.com Inc. | |||||||
| Home Depot Inc. | |||||||
| TJX Cos. Inc. | |||||||
Based on: 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), 10-K (reporting date: 2020-01-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial data reveals several notable trends over the periods considered.
- Economic Profit
- Economic profit exhibits significant fluctuations, with an upward trend from 1977 million USD in early 2020 to a peak of 6201 million USD in early 2022. This is followed by a decline to 3818 million USD in early 2023, then a rebound to 5318 million USD in early 2024, and a subsequent decrease to 4659 million USD in early 2025. The pattern indicates volatility, with substantial increases followed by notable declines, suggesting varying operational efficiency or changes in market conditions within the timeframe.
- Adjusted Net Sales
- Adjusted net sales demonstrate an overall increasing trend from 72135 million USD in early 2020, reaching a high of 96822 million USD by early 2023. After this peak, sales drop to 86206 million USD in early 2024 and decline slightly further to 83667 million USD in early 2025. This trend suggests strong growth in sales up to 2023, followed by a period of contraction, which may reflect changes in demand, competitive pressures, or other market dynamics.
- Economic Profit Margin
- The economic profit margin shows a pattern closely aligned with economic profit but expressed as a percentage of sales. It rises from 2.74% in early 2020 to a peak of 6.41% in early 2022, indicating improving profitability relative to sales. A drop to 3.94% occurs in early 2023, followed by another increase to 6.17% in early 2024, and a decrease to 5.57% in early 2025. This variability highlights changing efficiency or cost structures affecting the company’s ability to convert sales into economic profit.
Overall, the data exhibits periods of growth and contraction in economic profit and adjusted net sales, with profitability margins reflecting these fluctuations. The peak in early 2022 for both economic profit and margin concurs with the peak in sales around early 2023, after which both indicators decline, implying a recent softening in company performance.