Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Target Corp. (NYSE:TGT)

Economic Value Added (EVA)

Advanced level


Economic Profit

Target Corp., economic profit calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Feb 1, 2020 Feb 2, 2019 Feb 3, 2018 Jan 28, 2017 Jan 30, 2016 Jan 31, 2015
Net operating profit after taxes (NOPAT)1 3,896  3,683  3,262  3,451  3,477  3,107 
Cost of capital2 6.38% 6.27% 6.05% 5.90% 6.36% 6.33%
Invested capital3 27,256  26,047  27,017  27,067  28,693  30,140 
 
Economic profit4 2,157  2,051  1,628  1,854  1,652  1,198 

Based on: 10-K (filing date: 2020-03-11), 10-K (filing date: 2019-03-13), 10-K (filing date: 2018-03-14), 10-K (filing date: 2017-03-08), 10-K (filing date: 2016-03-11), 10-K (filing date: 2015-03-13).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2020 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 3,8966.38% × 27,256 = 2,157

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Target Corp.’s economic profit increased from 2018 to 2019 and from 2019 to 2020.

Net Operating Profit after Taxes (NOPAT)

Target Corp., NOPAT calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Feb 1, 2020 Feb 2, 2019 Feb 3, 2018 Jan 28, 2017 Jan 30, 2016 Jan 31, 2015
Net earnings (loss) 3,281  2,937  2,934  2,737  3,363  (1,636)
Deferred income tax expense (benefit)1 178  322  (192) 41  (322)
Increase (decrease) in equity equivalents2 178  322  (192) 41  (322)
Net interest expense 477  461  666  1,004  607  882 
Interest expense, operating lease liability3 92  85  127  136  128  120 
Adjusted net interest expense 569  546  793  1,140  735  1,002 
Tax benefit of net interest expense4 (119) (115) (267) (399) (257) (351)
Adjusted net interest expense, after taxes5 449  431  526  741  478  651 
(Income) loss from discontinued operations, net of tax6 (12) (7) (6) (68) (42) 4,085 
Net operating profit after taxes (NOPAT) 3,896  3,683  3,262  3,451  3,477  3,107 

Based on: 10-K (filing date: 2020-03-11), 10-K (filing date: 2019-03-13), 10-K (filing date: 2018-03-14), 10-K (filing date: 2017-03-08), 10-K (filing date: 2016-03-11), 10-K (filing date: 2015-03-13).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in equity equivalents to net earnings (loss).

3 2020 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 2,475 × 3.71% = 92

4 2020 Calculation
Tax benefit of net interest expense = Adjusted net interest expense × Statutory income tax rate
= 569 × 21.00% = 119

5 Addition of after taxes interest expense to net earnings (loss).

6 Elimination of discontinued operations.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Target Corp.’s NOPAT increased from 2018 to 2019 and from 2019 to 2020.

Cash Operating Taxes

Target Corp., cash operating taxes calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Feb 1, 2020 Feb 2, 2019 Feb 3, 2018 Jan 28, 2017 Jan 30, 2016 Jan 31, 2015
Provision for income taxes 921  746  718  1,296  1,602  1,204 
Less: Deferred income tax expense (benefit) 178  322  (192) 41  (322)
Add: Tax savings from net interest expense 119  115  267  399  257  351 
Cash operating taxes 862  539  1,177  1,654  2,181  1,548 

Based on: 10-K (filing date: 2020-03-11), 10-K (filing date: 2019-03-13), 10-K (filing date: 2018-03-14), 10-K (filing date: 2017-03-08), 10-K (filing date: 2016-03-11), 10-K (filing date: 2015-03-13).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Target Corp.’s cash operating taxes decreased from 2018 to 2019 but then increased from 2019 to 2020 not reaching 2018 level.

Invested Capital

Target Corp., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel LibreOffice Calc
Feb 1, 2020 Feb 2, 2019 Feb 3, 2018 Jan 28, 2017 Jan 30, 2016 Jan 31, 2015
Current portion of long-term debt and other borrowings 161  1,052  270  1,718  815  91 
Long-term debt and other borrowings, excluding current portion 11,338  10,223  11,317  11,031  11,945  12,705 
Operating lease liability1 2,475  2,170  2,734  2,102  1,872  2,042 
Total reported debt & leases 13,974  13,445  14,321  14,851  14,632  14,838 
Shareholders’ investment 11,833  11,297  11,709  10,953  12,957  13,997 
Net deferred tax (assets) liabilities2 1,114  960  680  825  790  1,130 
Equity equivalents3 1,114  960  680  825  790  1,130 
Accumulated other comprehensive (income) loss, net of tax4 868  805  747  638  629  599 
Adjusted shareholders’ investment 13,815  13,062  13,136  12,416  14,376  15,726 
Construction-in-progress5 (533) (460) (440) (200) (315) (424)
Invested capital 27,256  26,047  27,017  27,067  28,693  30,140 

Based on: 10-K (filing date: 2020-03-11), 10-K (filing date: 2019-03-13), 10-K (filing date: 2018-03-14), 10-K (filing date: 2017-03-08), 10-K (filing date: 2016-03-11), 10-K (filing date: 2015-03-13).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of equity equivalents to shareholders’ investment.

4 Removal of accumulated other comprehensive income.

5 Subtraction of construction-in-progress.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Target Corp.’s invested capital decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.

Cost of Capital

Target Corp., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 52,892  52,892  ÷ 68,601  = 0.77 0.77 × 7.33% = 5.65%
Debt3 13,234  13,234  ÷ 68,601  = 0.19 0.19 × 4.12% × (1 – 21.00%) = 0.63%
Operating lease liability4 2,475  2,475  ÷ 68,601  = 0.04 0.04 × 3.71% × (1 – 21.00%) = 0.11%
Total: 68,601  1.00 6.38%

Based on: 10-K (filing date: 2020-03-11).

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 39,820  39,820  ÷ 53,819  = 0.74 0.74 × 7.33% = 5.42%
Debt3 11,829  11,829  ÷ 53,819  = 0.22 0.22 × 4.15% × (1 – 21.00%) = 0.72%
Operating lease liability4 2,170  2,170  ÷ 53,819  = 0.04 0.04 × 3.91% × (1 – 21.00%) = 0.12%
Total: 53,819  1.00 6.27%

Based on: 10-K (filing date: 2019-03-13).

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 38,066  38,066  ÷ 53,107  = 0.72 0.72 × 7.33% = 5.25%
Debt3 12,307  12,307  ÷ 53,107  = 0.23 0.23 × 4.15% × (1 – 33.70%) = 0.64%
Operating lease liability4 2,734  2,734  ÷ 53,107  = 0.05 0.05 × 4.64% × (1 – 33.70%) = 0.16%
Total: 53,107  1.00 6.05%

Based on: 10-K (filing date: 2018-03-14).

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 30,408  30,408  ÷ 46,080  = 0.66 0.66 × 7.33% = 4.84%
Debt3 13,570  13,570  ÷ 46,080  = 0.29 0.29 × 4.56% × (1 – 35.00%) = 0.87%
Operating lease liability4 2,102  2,102  ÷ 46,080  = 0.05 0.05 × 6.45% × (1 – 35.00%) = 0.19%
Total: 46,080  1.00 5.90%

Based on: 10-K (filing date: 2017-03-08).

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 49,121  49,121  ÷ 65,237  = 0.75 0.75 × 7.33% = 5.52%
Debt3 14,244  14,244  ÷ 65,237  = 0.22 0.22 × 5.03% × (1 – 35.00%) = 0.71%
Operating lease liability4 1,872  1,872  ÷ 65,237  = 0.03 0.03 × 6.84% × (1 – 35.00%) = 0.13%
Total: 65,237  1.00 6.36%

Based on: 10-K (filing date: 2016-03-11).

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 50,813  50,813  ÷ 67,732  = 0.75 0.75 × 7.33% = 5.50%
Debt3 14,878  14,878  ÷ 67,732  = 0.22 0.22 × 5.05% × (1 – 35.00%) = 0.72%
Operating lease liability4 2,042  2,042  ÷ 67,732  = 0.03 0.03 × 5.87% × (1 – 35.00%) = 0.12%
Total: 67,732  1.00 6.33%

Based on: 10-K (filing date: 2015-03-13).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Target Corp., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Feb 1, 2020 Feb 2, 2019 Feb 3, 2018 Jan 28, 2017 Jan 30, 2016 Jan 31, 2015
Selected Financial Data (US$ in millions)
Economic profit1 2,157  2,051  1,628  1,854  1,652  1,198 
Invested capital2 27,256  26,047  27,017  27,067  28,693  30,140 
Performance Ratio
Economic spread ratio3 7.91% 7.87% 6.02% 6.85% 5.76% 3.98%
Benchmarks
Economic Spread Ratio, Competitors4
Amazon.com Inc. -4.86% -4.11% -11.37% -7.18% -10.42%
Costco Wholesale Corp. 6.44% 6.15% 4.87% 4.48% 3.79%
Dollar General Corp. 4.72% 4.60% 3.42% 3.27% 2.90% 2.14%
Home Depot Inc. 24.15% 24.56% 16.84% 14.63% 12.29% 11.26%
Lowe’s Cos. Inc. 6.75% -0.74% 2.88% 1.79% -0.19% -0.20%
TJX Cos. Inc. 11.36% 10.71% 8.63% 8.66% 10.61% 11.26%
Walmart Inc. 5.87% 0.59% 3.68% 6.51% 5.57% 7.36%

Based on: 10-K (filing date: 2020-03-11), 10-K (filing date: 2019-03-13), 10-K (filing date: 2018-03-14), 10-K (filing date: 2017-03-08), 10-K (filing date: 2016-03-11), 10-K (filing date: 2015-03-13).

1 Economic profit. See details »

2 Invested capital. See details »

3 2020 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,157 ÷ 27,256 = 7.91%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Target Corp.’s economic spread ratio improved from 2018 to 2019 and from 2019 to 2020.

Economic Profit Margin

Target Corp., economic profit margin calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Feb 1, 2020 Feb 2, 2019 Feb 3, 2018 Jan 28, 2017 Jan 30, 2016 Jan 31, 2015
Selected Financial Data (US$ in millions)
Economic profit1 2,157  2,051  1,628  1,854  1,652  1,198 
Sales 77,130  74,433  71,879  69,495  73,785  72,618 
Performance Ratio
Economic profit margin2 2.80% 2.76% 2.26% 2.67% 2.24% 1.65%
Benchmarks
Economic Profit Margin, Competitors3
Amazon.com Inc. -2.20% -1.80% -5.03% -2.24% -3.22%
Costco Wholesale Corp. 1.01% 0.90% 0.72% 0.71% 0.58%
Dollar General Corp. 3.25% 3.25% 2.54% 2.42% 2.15% 1.69%
Home Depot Inc. 8.01% 7.76% 5.86% 5.32% 4.69% 4.35%
Lowe’s Cos. Inc. 2.51% -0.26% 1.17% 0.75% -0.08% -0.09%
TJX Cos. Inc. 4.96% 4.66% 3.89% 3.90% 4.62% 5.04%
Walmart Inc. 1.89% 0.18% 1.06% 2.01% 1.82% 2.30%

Based on: 10-K (filing date: 2020-03-11), 10-K (filing date: 2019-03-13), 10-K (filing date: 2018-03-14), 10-K (filing date: 2017-03-08), 10-K (filing date: 2016-03-11), 10-K (filing date: 2015-03-13).

1 Economic profit. See details »

2 2020 Calculation
Economic profit margin = 100 × Economic profit ÷ Sales
= 100 × 2,157 ÷ 77,130 = 2.80%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company’s profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Target Corp.’s economic profit margin improved from 2018 to 2019 and from 2019 to 2020.