Target Corp. (NYSE:TGT)

The analysis of the financial data reveals several notable trends and insights regarding profitability, invested capital, cost of capital, and economic profit over the six-year period under review.

Net Operating Profit After Taxes (NOPAT)

NOPAT demonstrates an overall fluctuating trend. There was a significant increase from 3,896 million USD in 2020 to a peak of 7,872 million USD in 2022. However, after this peak, NOPAT declined sharply to 3,821 million USD in 2023, before recovering somewhat to 4,953 million USD in 2024, and then slightly decreasing again to 4,376 million USD in 2025. This pattern suggests variability in operational efficiency or external factors impacting profitability.

Cost of Capital

The cost of capital remained relatively stable, fluctuating within a narrow range from 12.67% in 2020 to a low of 12.01% in 2025. The highest value was 13.57% in 2022, coinciding with the peak in NOPAT, followed by a moderate decline thereafter. This suggests that capital costs did not drastically influence the company’s economic profit volatility.

Invested Capital

Invested capital exhibited a gradual upward trend over the period, increasing from 27,256 million USD in 2020 to 36,107 million USD in 2025. This steady accumulation indicates ongoing investments or capital base expansion despite fluctuations in operational profitability.

Economic Profit

Economic profit showed significant volatility. Starting at 443 million USD in 2020, it more than doubled to 920 million USD in 2021, and then surged to 3,780 million USD in 2022, reflecting strong value creation during this period. However, it turned negative in 2023 with a loss of 107 million USD, indicating the company failed to cover its cost of capital that year. In subsequent years, economic profit rebounded to positive values of 486 million USD in 2024 and a marginal 40 million USD in 2025, showing marginal value creation but with diminished momentum.

Overall, the data reveals a cycle of peak profitability and value creation around 2022, followed by a correction and reduced economic profit in later years despite continuous growth in invested capital. The stable cost of capital suggests that changes in operational performance have been the primary drivers of economic profit variability.

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.

The financial data reveals notable fluctuations across the evaluated periods in key profitability and capital efficiency metrics.

Economic Profit

The economic profit exhibited a generally increasing trend from 443 million US dollars in early 2020 to a peak of 3,780 million in early 2022. However, there was a sharp decline into negative territory in early 2023, with a loss of 107 million US dollars. This negative value was partially recovered in the subsequent years, recording 486 million in early 2024 and then declining again to 40 million in early 2025. This pattern suggests volatility in value creation over the period, with a significant downturn interrupting a previously strong upward trend.

Invested Capital

The invested capital shows a steady upward trajectory from 27,256 million US dollars in early 2020 to 36,107 million US dollars by early 2025. While the growth rate slowed after 2022, the overall increase indicates ongoing investment and expansion of capital employed over the five-year span.

Economic Spread Ratio

The economic spread ratio, reflecting the return spread over cost of capital, mirrors the volatility in economic profit. Starting at 1.63% in 2020, it increased to a high of 12.54% in 2022, signifying strong value creation efficiency during this period. This was followed by a negative spread of -0.36% in 2023, consistent with the negative economic profit recorded. The ratio partially rebounds to 1.42% in 2024 before declining to 0.11% in 2025, indicating diminished returns relative to capital costs by the end of the period.

Overall, the data indicates a period of growth and improved efficiency until early 2022, followed by a significant decline in economic profitability and capital efficiency in early 2023. The partial recovery in subsequent years suggests resilience but also highlights ongoing challenges in sustaining high levels of economic profit relative to invested capital.

Net Sales

Net sales showed a consistent upward trend from February 2020 through January 2023, increasing from $78,112 million to a peak of $109,120 million. After this peak, there was a slight decline over the next two years, with net sales falling to $107,412 million in February 2024 and further to $106,566 million in February 2025. This indicates overall growth in sales over the period, though recent years suggest a stabilization or minor contraction in revenue.

Economic Profit

Economic profit fluctuated significantly over the observed period. It rose sharply from $443 million in 2020 to $3,780 million in 2022, representing strong profitability growth. However, there was a stark reversal in 2023, with economic profit turning negative to -$107 million. The subsequent years showed some recovery, with economic profit increasing to $486 million in 2024 but then declining again to $40 million in 2025. This volatility suggests challenges in maintaining consistent profitability despite stable sales figures.

Economic Profit Margin

The economic profit margin mirrored the volatility seen in economic profit. It increased steadily from 0.57% in 2020 to a high of 3.57% in 2022, indicating growing efficiency or value creation relative to sales. This was followed by a decline to -0.1% in 2023, reflecting a period of economic loss. The margin then modestly recovered to 0.45% in 2024 but dropped again to 0.04% in 2025. These fluctuations underscore inconsistent profitability relative to sales revenue during the period.

Summary Insights

The financial data reveals a period of growth in sales accompanied by significant fluctuations in economic profitability. The peak performance in 2022 is followed by challenges in 2023, with economic profit turning negative despite relatively stable sales. The partial recovery in profitability afterward suggests efforts to improve financial performance, but the continued low margins indicate ongoing difficulties in sustaining high economic profit levels. This pattern may point to changes in cost structure, operational efficiency, or market conditions affecting profitability independent of sales volume.