Stock Analysis on Net

Target Corp. (NYSE:TGT)

$24.99

Economic Value Added (EVA)

Microsoft Excel

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.

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Economic Profit

Target Corp., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Feb 1, 2025 Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01).

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 net operating profit after taxes exhibited growth from 3896 million USD in early 2020 to a peak of 7872 million USD in early 2022. However, this was followed by a sharp decline to 3821 million USD in early 2023. Subsequently, the figure showed partial recovery, increasing to 4953 million USD and then slightly decreasing to 4376 million USD by early 2025.
Cost of Capital
The cost of capital fluctuated moderately over the period. Starting at 12.65% in 2020, it rose to around 13.5% by early 2022, then gradually decreased, reaching 11.99% in early 2025. This general decline after 2022 may reflect changes in market conditions or company risk profile.
Invested Capital
Invested capital showed a consistent upward trend, increasing from 27,256 million USD in 2020 to 36,107 million USD in early 2025. This steady increase indicates ongoing investments or asset accumulation over the observed periods.
Economic Profit
Economic profit grew substantially from 449 million USD in 2020 to a peak of 3,787 million USD in early 2022, mirroring the trend in NOPAT. However, it drastically dropped to a negative value of -101 million USD in early 2023, signifying a period where returns failed to cover the cost of capital. Subsequently, it recovered to 494 million USD in early 2024 but fell sharply to 47 million USD by early 2025, indicating diminishing economic value creation despite increased invested capital.

Net Operating Profit after Taxes (NOPAT)

Target Corp., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Feb 1, 2025 Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020
Net earnings
Deferred income tax expense (benefit)1
Increase (decrease) in equity equivalents2
Net interest expense
Interest expense, operating lease liability3
Adjusted net interest expense
Tax benefit of net interest expense4
Adjusted net interest expense, after taxes5
(Income) loss from discontinued operations, net of tax6
Net operating profit after taxes (NOPAT)

Based on: 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01).

1 Elimination of deferred tax expense. See details »

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

3 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

4 2025 Calculation
Tax benefit of net interest expense = Adjusted net interest expense × Statutory income tax rate
= × 21.00% =

5 Addition of after taxes interest expense to net earnings.

6 Elimination of discontinued operations.


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.

Cash Operating Taxes

Target Corp., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Feb 1, 2025 Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020
Provision for income taxes
Less: Deferred income tax expense (benefit)
Add: Tax savings from net interest expense
Cash operating taxes

Based on: 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01).


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.

Invested Capital

Target Corp., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Feb 1, 2025 Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020
Current portion of long-term debt and other borrowings
Long-term debt and other borrowings, excluding current portion
Operating lease liability1
Total reported debt & leases
Shareholders’ investment
Net deferred tax (assets) liabilities2
Equity equivalents3
Accumulated other comprehensive (income) loss, net of tax4
Adjusted shareholders’ investment
Construction-in-progress5
Invested capital

Based on: 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01).

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.


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.

Cost of Capital

Target Corp., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt and other borrowings, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2025-02-01).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and other borrowings, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt and other borrowings, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2024-02-03).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and other borrowings, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt and other borrowings, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2023-01-28).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and other borrowings, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt and other borrowings, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2022-01-29).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and other borrowings, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt and other borrowings, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2021-01-30).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and other borrowings, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt and other borrowings, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2020-02-01).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and other borrowings, including current portion. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

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

Microsoft Excel
Feb 1, 2025 Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
Costco Wholesale Corp.
Walmart Inc.

Based on: 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01).

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
The economic profit exhibited significant fluctuations over the analyzed periods. Starting at 449 million US dollars in early 2020, it increased sharply to 927 million in early 2021, followed by a pronounced peak at 3,787 million in early 2022. However, in early 2023, the economic profit turned negative, recording a loss of 101 million. Subsequently, it rebounded to positive values, with 494 million in early 2024 and a reduced figure of 47 million in early 2025. This indicates a volatile performance with a sharp peak, a temporary downturn, and a slower recovery in recent periods.
Invested Capital
Invested capital displayed a steady upward trend throughout the periods. It increased consistently from 27,256 million US dollars in early 2020 to 36,107 million in early 2025. The gradual rise suggests ongoing or sustained investments and asset growth within the company over the five-year span.
Economic Spread Ratio
The economic spread ratio, expressed as a percentage, also showed considerable variation. Beginning at 1.65% in early 2020, it more than doubled to 3.04% in early 2021, followed by a steep surge to 12.56% in early 2022. This was succeeded by a marked decline into negative territory at -0.33% in early 2023, before recovering to 1.44% in early 2024 and then falling again to 0.13% in early 2025. The pattern suggests fluctuations in profitability relative to invested capital, with a peak period in 2022 and reduced economic returns thereafter.
Summary
Overall, the data reflect a period characterized by substantial volatility in profitability metrics, highlighted by a peak in economic profit and spread ratio in 2022, followed by a downturn in 2023. Despite this, invested capital increased steadily, indicating ongoing investment activity. The more recent years show a recovery from negative profit back into modest positive economic profit and spread, albeit at significantly lower levels compared to the peak, suggesting cautious financial performance stabilization.

Economic Profit Margin

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

Microsoft Excel
Feb 1, 2025 Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020
Selected Financial Data (US$ in millions)
Economic profit1
Net sales
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
Costco Wholesale Corp.
Walmart Inc.

Based on: 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01).

1 Economic profit. See details »

2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × ÷ =

3 Click competitor name to see calculations.


Net Sales
Net sales exhibited a consistent upward trend from 78,112 million US dollars in 2020 to a peak of 109,120 million US dollars in 2023. However, following this peak, net sales slightly declined to 107,412 million in 2024 and further to 106,566 million in 2025, indicating a mild reduction after several years of growth.
Economic Profit
Economic profit showed considerable volatility over the analyzed periods. It started at 449 million US dollars in 2020, increased significantly to 927 million in 2021, and reached a substantial high of 3,787 million in 2022. This was followed by a large decline to a negative value of -101 million in 2023, signaling a loss in economic profit that year. Economic profit then recovered to positive values in 2024 and 2025, though at much lower levels of 494 million and 47 million respectively, suggesting challenges in maintaining high profitability after 2022.
Economic Profit Margin
The economic profit margin mirrored the fluctuations seen in economic profit. It increased from 0.57% in 2020 to a peak of 3.57% in 2022, before descending sharply to a negative margin of -0.09% in 2023. Subsequently, it rebounded slightly to 0.46% in 2024 but dropped close to zero at 0.04% in 2025. This pattern indicates varying efficiency in generating economic profit relative to net sales, with a marked deterioration in 2023 followed by a modest recovery and stabilization at very low levels.