Walt Disney Co. (NYSE:DIS)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes exhibited significant volatility during the analyzed periods. Starting at a positive figure of 16,211 million USD in 2019, it experienced a drastic decline to -2,053 million USD in 2020, indicating a substantial operational loss. Following this low point, there was a recovery trend with NOPAT increasing to 2,215 million USD in 2021 and further rising to 6,699 million USD in 2022. However, this was followed by a decrease to 3,406 million USD in 2023 before improving again to 6,260 million USD in 2024. Overall, despite fluctuations, the latter years show a general recovery in operational profitability compared to the trough in 2020.

Cost of Capital

The cost of capital remained relatively stable across the years, fluctuating narrowly between 14.78% and 15.48%. There was a slight decline from 15.48% in 2019 to a low of 14.78% in 2022, but it increased slightly thereafter, ending at 15.25% in 2024. This stability suggests a consistent required return on investment from the company's capital providers over the examined period.

Invested Capital

Invested capital showed moderate variation over the years. Starting at 169,178 million USD in 2019, it increased steadily, peaking at 174,594 million USD in 2020. Subsequently, it displayed small decreases with minor fluctuations, reaching 173,977 million USD in 2022 and 173,764 million USD in 2023 before dropping more notably to 166,066 million USD in 2024. This pattern implies a period of capital expansion followed by a moderate reduction in invested assets in the final year analyzed.

Economic Profit

Economic profit consistently remained negative throughout the entirety of the period, indicating that the company's returns did not exceed its cost of capital. Starting from a deficit of -9,972 million USD in 2019, the economic profit further deteriorated sharply to -27,974 million USD in 2020. Although some improvement occurred in subsequent years, the economic profit remained deeply negative, with figures such as -23,807 million USD in 2021 and hovering around -19,000 to -22,700 million USD in the final years. This persistent negative economic profit suggests that despite some operational improvements, the company's capital costs continued to outweigh its net operating income.

Net Income (Loss) Attributable to The Walt Disney Company

The net income demonstrates significant variability over the analyzed years. Initially, there was a strong positive net income of 11,054 million US dollars in the fiscal year ending September 28, 2019. However, this was followed by a substantial decline resulting in a net loss of 2,864 million US dollars in the fiscal year ending October 3, 2020. Recovery began in the subsequent years, with net income returning to positive figures of 1,995 million US dollars in 2021, increasing to 3,145 million US dollars in 2022. There was a slight decline to 2,354 million US dollars in 2023, followed by a pronounced increase to 4,972 million US dollars in 2024. Overall, the net income figures show a sharp dip likely attributable to extraordinary or cyclical factors around 2020, with a clear recovery trend in the subsequent periods.

Net Operating Profit After Taxes (NOPAT)

The NOPAT figures follow a pattern similar to net income, reflecting operational profitability after tax adjustments. Starting at a robust 16,211 million US dollars in 2019, there was a notable drop to -2,053 million US dollars in 2020, indicating operational losses during that period. A gradual recovery is observed in the following years, with an increase to 2,215 million US dollars in 2021, and a significant rise to 6,699 million US dollars in 2022. The year 2023 saw a decrease to 3,406 million US dollars, but this was followed by another increase to 6,260 million US dollars in 2024. These fluctuations suggest a period of operational challenges in 2020, followed by a strong recovery and intermittent volatility in the subsequent years.

Summary of Trends

Both net income and NOPAT experienced a pronounced decline in the fiscal year 2020, reflecting a challenging environment for the company during that period. The figures suggest a recovery trajectory beginning in 2021, with steady improvements through 2022 and 2024. Despite some fluctuations in 2023, the overall trend is positive, indicating enhanced profitability and operational efficiency over the longer term. The data points to resilience and a capacity to recover from significant setbacks, with profitability levels approaching or exceeding pre-2020 values by 2024.

The data reveals notable fluctuations in both income tax expenses on income from continuing operations and cash operating taxes over the periods analyzed.

Income Tax Expense on Income from Continuing Operations

This metric shows a significant decline from 3,031 million US dollars in 2019 to a low of 25 million in 2021, indicating a substantial reduction in tax expenses relative to income during that year. However, there is an upward trend following 2021, rising to 1,732 million in 2022, then slightly decreasing to 1,379 million in 2023, before increasing again to 1,796 million in 2024. Despite these fluctuations, the 2024 figure remains lower than the 2019 value but is substantially higher than the minimal level seen in 2021.

Cash Operating Taxes

Cash operating taxes exhibit a consistent upward trend over the entire period, starting at 1,297 million US dollars in 2019 and increasing steadily each year. The rise becomes more pronounced from 2022 onwards, with an increase from 1,891 million in 2022 to 3,100 million in 2023, followed by a slight decrease to 2,982 million in 2024. Overall, cash operating taxes more than doubled from 2019 to their peak in 2023, indicating increased tax payments in operational cash flows.

The contrasting trends between income tax expense and cash operating taxes suggest differing impacts on accounting income versus cash flow basis taxes, with income tax expense experiencing volatility, while cash operating taxes show a clear upward pattern until 2023, stabilizing slightly in the latest period.

Total reported debt & leases

The total reported debt and leases exhibited an overall decreasing trend from 2019 to 2024. Starting at $50,841 million in 2019, the amount increased to a peak of $62,323 million in 2020, likely reflecting heightened borrowing or leasing activities during that year. Subsequently, there was a consistent decline through 2024, culminating in $49,517 million, which is slightly below the 2019 level. This pattern indicates a strategic reduction in debt and lease obligations following the 2020 peak.

Total Disney Shareholder’s equity

Shareholder’s equity showed a generally upward trajectory over the period. Beginning at $88,877 million in 2019, equity decreased to $83,583 million in 2020, which might be associated with the elevated debt levels that year. From 2020 onward, equity increased steadily, reaching $100,696 million by 2024. This growth suggests an improvement in retained earnings or additional equity infusions, leading to stronger financial stability and increased net asset value.

Invested capital

Invested capital remained relatively stable throughout the period but demonstrated a slight overall decline from 2019 through 2024. Starting at $169,178 million in 2019, the value peaked slightly in 2020 at $174,594 million and fluctuated modestly thereafter. By 2024, invested capital was recorded at $166,066 million, indicating a minor contraction of about 2% from the 2019 figure. This stability implies steady investment levels in the company's operational assets despite fluctuations in debt and equity.

Summary

The data reflects a period of financial adjustment characterized by a peak in debt and leases in 2020, followed by a systematic reduction through 2024. Concurrently, shareholder equity experienced a dip in 2020 but then strengthened significantly, surpassing the pre-2020 levels by 2024. Invested capital remained mostly stable, suggesting consistent asset base maintenance. Overall, these trends suggest an emphasis on deleveraging and improving equity position while maintaining steady investment in capital assets over the analyzed timeframe.

Economic Profit

The economic profit exhibits significant negative values throughout the analyzed period, indicating persistent economic losses. Starting at -9,972 million US dollars in 2019, the loss escalated sharply to -27,974 million US dollars in 2020. Subsequently, the deficit decreased gradually over the following years, reaching -19,061 million US dollars in 2024. This pattern suggests that while the company faced substantial economic losses, particularly during 2020, there has been a trend toward reducing these losses in recent years.

Invested Capital

Invested capital showed slight fluctuations with an overall stable trend. Beginning at approximately 169,178 million US dollars in 2019, it peaked at around 174,594 million US dollars in 2020 and remained relatively steady in the subsequent years, hovering near 173,000 million US dollars. However, the value declined to 166,066 million US dollars by 2024. This decrease in invested capital toward the end of the period indicates a possible strategic shift or divestment activity.

Economic Spread Ratio

The economic spread ratio is consistently negative, reflecting inefficiency in generating returns above the cost of capital. It moved from -5.89% in 2019 to a low of -16.02% in 2020, mirroring the peak in economic profit losses. Following this trough, there was some improvement, with the ratio rising to -10.93% in 2022 before slightly worsening again to -11.48% in 2024. Despite fluctuations, the economic spread ratio remains substantially negative, underscoring ongoing challenges in creating economic value.

The analysis of the financial trends over the six-year period reveals several key observations regarding profitability and revenue generation.

Economic Profit

The company reported negative economic profit throughout the entire period, indicating that it did not generate surplus value above its cost of capital in these years. The economic loss peaked in the year ending October 3, 2020, with a significant decline to -27,974 million US dollars, which represents the largest deficit in the dataset. After this peak loss, there was a gradual recovery, with economic losses diminishing to -19,061 million US dollars by the year ending September 28, 2024. This trend suggests an improving but still negative economic profitability situation.

Adjusted Revenues

Revenue figures showed variability, initially declining from 70,704 million US dollars in 2019 to 64,920 million US dollars in 2020. Subsequently, revenues increased steadily over the following years, reaching 91,261 million US dollars by 2024. This growth signifies a robust revenue recovery, surpassing the pre-2020 level by a notable margin and reflecting improved operational performance or market conditions contributing to revenue expansion.

Economic Profit Margin

The economic profit margin, which measures economic profit as a percentage of revenues, followed a similar pattern to economic profit. It worsened sharply from -14.1% in 2019 to -43.09% in 2020, indicating a steep decline in value creation efficiency during that year. After 2020, the margin displayed consistent improvement, rising to -20.89% by 2024. Despite this improvement, the margins remained negative, underscoring ongoing challenges in achieving positive economic returns relative to the company's revenue base.

In summary, while adjusted revenues have recovered and grown significantly post-2020, the company’s economic profit and profit margins, although improving, continue to reflect prevailing economic losses. The data suggests ongoing efforts toward profitability optimization are needed to transition from economic loss to positive value creation.