Target Corp. (NYSE:TGT)

The financial data reveals several noteworthy trends over the six-year period.

Net Operating Profit After Taxes (NOPAT)

NOPAT experienced a general upward trend from 2020 through 2022, peaking significantly at 7,872 million US dollars in 2022. However, after this peak, there was a sharp decline in 2023 to 3,821 million, followed by a partial recovery in the subsequent years, reaching 4,953 million in 2024 and slightly decreasing to 4,376 million in 2025. This suggests volatility in operational profitability with notable fluctuations after 2022.

Cost of Capital

The cost of capital showed slight fluctuations throughout the period, beginning at 12.83% in 2020 and increasing modestly to 13.74% in 2022. Following this, it exhibited a gradual decline, dropping to 12.16% by 2025. This trend implies a moderately stable but slightly decreasing cost of financing or required return over the latter part of the period.

Invested Capital

Invested capital increased steadily over the years, growing from 27,256 million US dollars in 2020 to 36,107 million in 2025. The growth was relatively consistent with minor stagnation between 2021 and 2023, after which a more noticeable rise occurred. This indicates persistent capital deployment or reinvestment in the company.

Economic Profit

Economic profit exhibited high volatility and sensitivity to changes in NOPAT and cost of capital. It increased substantially from 400 million in 2020 to a peak of 3,728 million in 2022, highlighting strong value creation that year. However, this was followed by a negative economic profit of -157 million in 2023, signaling value erosion. Recovery was observed in 2024, when economic profit returned to positive territory at 430 million, but it declined sharply again to -13 million in 2025. This pattern reflects challenges in consistently generating returns exceeding the cost of capital.

Overall, the data indicates a period of growth and increased profitability up to 2022, interrupted by a significant decline in 2023. While some recovery occurs afterward, both NOPAT and economic profit fail to maintain peak levels, suggesting operational and value generation pressures. The steady increase in invested capital combined with variable economic profit underscores the importance of improving capital efficiency moving forward.

Net Earnings

The net earnings demonstrate significant variability over the observed periods. Starting at 3,281 million USD in 2020, earnings increased markedly to 4,368 million USD in 2021 and then exhibited a strong peak at 6,946 million USD in 2022. However, the subsequent years show a pronounced decline, with net earnings dropping to 2,780 million USD in 2023. Thereafter, earnings partially recovered to 4,138 million USD in 2024 and slightly decreased to 4,091 million USD in 2025. This trend suggests a period of robust profit growth culminating in 2022, followed by a sharp contraction and partial stabilization in the latest years.

Net Operating Profit After Taxes (NOPAT)

NOPAT follows a pattern somewhat aligned with net earnings but with some variation in magnitude. Beginning at 3,896 million USD in 2020, NOPAT increased steadily to 5,024 million USD in 2021 and then experienced a substantial rise to 7,872 million USD in 2022. This was followed by a notable decrease to 3,821 million USD in 2023. The value subsequently increased to 4,953 million USD in 2024, then declined again to 4,376 million USD in 2025. The pattern indicates that operational profitability reached its highest point in 2022 and then declined sharply in 2023, showing a moderate recovery but not reaching previous peak levels in the following years.

Summary of Trends

Both net earnings and NOPAT reveal a strong growth phase culminating in 2022, indicative of favorable business conditions or operational efficiencies. The significant declines in both metrics in 2023 point to potential challenges or adverse conditions impacting profitability in that period. The partial rebound in 2024 followed by stabilization or slight decline in 2025 indicates the firm is managing to recover from the downturn but has yet to regain peak profitability levels seen in 2022. Overall, the data reflect volatility in profitability with a cyclical peak and trough pattern over the six-year span.

Provision for Income Taxes

The provision for income taxes exhibited an overall upward trend from February 1, 2020, through January 29, 2022, increasing from $921 million to $1961 million. This represents a significant rise over the two-year span. Subsequently, there was a marked decline to $638 million as of January 28, 2023, after which the provision increased again, reaching approximately $1170 million by February 1, 2025. This fluctuation suggests variability in taxable income or changes in tax planning strategies over the years measured.

Cash Operating Taxes

Cash operating taxes showed considerable volatility throughout the period. Starting at $862 million in February 2020, the amount rose sharply to $1585 million by January 30, 2021, and remained relatively high at $1546 million in January 29, 2022. However, in the following year, there was a steep decline to $178 million in January 28, 2023. After this trough, cash operating taxes rebounded to $998 million in February 3, 2024, and further increased to $1474 million by February 1, 2025. These wide swings indicate fluctuations in actual tax outflows, possibly influenced by changes in taxable income, timing differences, or tax payments.

Comparative Insights

Both provision for income taxes and cash operating taxes showed similar patterns of rising sharply in the early years, reaching peaks around 2021-2022, followed by sharp declines in 2023, and then partial recoveries towards 2025. Notably, the cash operating taxes displayed greater volatility compared to provisions, suggesting possible timing mismatches or adjustments between accounting provisions and actual cash tax payments. The divergence in the magnitude of changes, particularly the sharp drop in cash operating taxes in 2023 compared to provisions, may reflect tax refunds, credits, or other operational factors affecting cash flows distinct from accounting accruals.

Total Reported Debt & Leases

The total reported debt and leases show a consistent upward trend across the periods, increasing from $13,974 million in early 2020 to $19,875 million by early 2025. This indicates a growing reliance on debt and lease obligations over the five-year span, with the most notable increases occurring between 2021 and 2023. The growth rate appears to moderate slightly towards the final years but remains at a high absolute level.

Shareholders’ Investment

Shareholders’ investment exhibits more fluctuation compared to debt levels. It initially rises from $11,833 million in 2020 to a peak of $14,440 million in 2021, followed by a decline through 2023 down to $11,232 million. After this trough, it rebounds significantly in 2024 and 2025, reaching $14,666 million. This pattern suggests periods of both contraction and expansion in shareholder equity, possibly reflecting profit retention, dividend policy changes, or equity financing activities during these years.

Invested Capital

Invested capital shows a general upward trajectory over the observed time frame. Beginning at $27,256 million in 2020, it increases steadily with a slight dip only in 2022, remaining around $30,000 million before accelerating growth to $36,107 million by 2025. The growth in invested capital aligns with the increasing debt levels and mostly recovering shareholders’ investment, indicating an overall expansion in the company’s capital base.

Overall Analysis

The financial data depicts a company increasing its capital base primarily through rising debt while shareholders’ equity shows variability. The growing total invested capital alongside increasing debt suggests that the company may be financing growth or operations with a heavier reliance on debt instruments. The variable equity levels imply possible fluctuations in earnings retention or capital structure adjustments. This pattern of rising debt and invested capital coupled with equity variability may have implications for financial leverage and risk profile over the reported years.

Economic Profit

The economic profit shows significant volatility over the analyzed periods. Initially, there is a moderate positive value of 400 million US dollars, which increases substantially to 868 million and then peaks dramatically at 3,728 million in the third period. However, in the fourth period, there is a notable decline resulting in a negative economic profit of -157 million, indicating a loss in value creation. The subsequent years show a recovery to 430 million but decline again to a slightly negative economic profit of -13 million in the last period. This fluctuation suggests instability in the company's ability to generate profit above its cost of capital.

Invested Capital

Invested capital presents a steady upward trend across the periods, starting from 27,256 million US dollars and increasing consistently to reach 36,107 million by the final period. This growth in invested capital reflects an ongoing increase in the resources committed to operations and investments, possibly supporting future growth or reflecting expansions and acquisitions.

Economic Spread Ratio

The economic spread ratio, which measures the return on invested capital relative to the cost of capital, exhibits significant variation. Beginning at 1.47%, it rises to 2.85%, then peaks sharply at 12.37%, correlating with the peak in economic profit in the same period. Following this peak, there is a reversal into negative territory at -0.52%, aligning with the loss recorded in economic profit, before recovering somewhat to positive figures of 1.25% and then slightly below zero at -0.04%. This trend mirrors the company's fluctuating efficiency in generating returns above its capital costs over the periods.

Net Sales

Net sales demonstrated a consistent upward trend from the initial period to the more recent years, increasing from approximately $78.1 billion to a peak of about $109.1 billion in the 2023 fiscal year. However, following this peak, net sales showed a slight decline, settling near $106.6 billion in the latest period.

Economic Profit

Economic profit exhibited significant volatility throughout the periods analyzed. Starting at $400 million, it more than doubled to $868 million in the following year, followed by a substantial surge to $3.7 billion in 2022. This was succeeded by a sharp reversal to a loss of $157 million in 2023. The economic profit rebounded to a positive $430 million in 2024, only to decline again to a negligible negative value by 2025, indicating inconsistent profitability over time.

Economic Profit Margin

The economic profit margin mirrored the volatility in economic profit, beginning at a modest 0.51%, increasing to nearly 0.93%, and peaking at 3.52% in fiscal 2022. Subsequently, the margin dropped below zero to -0.14% in 2023, signaling a loss in economic value. It marginally recovered to 0.40% in 2024, then again edged down close to zero by 2025, suggesting that economic profitability relative to sales has been unstable and diminished towards the most recent period.

Overall Insights

Although net sales grew steadily over the years before a slight decline, economic profit and its margin demonstrate considerable fluctuation, indicating challenges in converting sales growth into sustained economic value. The periods of negative economic profit and margin suggest episodes of reduced efficiency or increased costs outweighing revenue gains. The most recent data reflects near break-even economic profitability, emphasizing the need for strategic focus on improving operational efficiency and cost management to restore and stabilize economic profit levels.