Target Corp. (NYSE:TGT)

The analysis of financial ratios over multiple quarterly periods reveals distinct trends in the subject company's performance and capital structure.

Return on Assets (ROA)

The Return on Assets demonstrates an initial upward trend from 6.18% to a peak of approximately 12.91% over the earlier periods. Following this peak, a notable decline occurs, bottoming around 5.21% before recovering moderately to values fluctuating around 6 to 8%. Toward the most recent periods, ROA stabilizes near 6%, indicating a moderate level of efficiency in asset utilization relative to earnings.

Financial Leverage

Financial Leverage exhibits some variability but generally trends upward from roughly 3.8 to over 5.0, reflecting increased reliance on debt or liabilities relative to equity during mid-periods. This leverage then decreases steadily back toward approximately 3.7 to 3.9 in the later periods, indicative of a possible de-risking strategy or capital structure optimization reducing dependency on borrowed funds.

Return on Equity (ROE)

Return on Equity shows a strong rising trend initially, moving from about 25% to over 54%, suggesting enhanced profitability relative to shareholder equity. Thereafter, ROE declines substantially to near 23-25%, with some volatility observed in the mid to late periods. This pattern may correspond to changes in operational efficiency, leverage levels, or market conditions affecting net income. The general post-peak decline coupled with fluctuations hints at challenges in sustaining peak equity returns.

Overall, the company experienced a phase of increasing profitability and leverage, followed by contraction in returns and deleveraging. The ROA and ROE trends suggest that while asset productivity and equity efficiency peaked substantially, they faced downward pressure in subsequent periods. The leverage trend aligns with these observations, indicating efforts to manage financial risk and balance sheet composition. These shifts reflect a dynamic adjustment to market or internal conditions impacting profitability and capital management.

Net Profit Margin

The net profit margin shows an overall fluctuating trend across the periods. It increased from 3.46% in May 2020 to a peak of 6.56% in October 2021, indicating improved profitability. After this peak, the margin steadily declined to a low of 2.49% in April 2023. Subsequently, the margin recovered moderately, stabilizing around 3.5% to 4.1% through early 2025, though it did not return to prior peak levels. This pattern suggests periods of enhanced operational efficiency followed by challenges in maintaining high profit margins.

Asset Turnover

The asset turnover ratio remained relatively stable but exhibited minor fluctuations. It started at 1.79 in May 2020, slightly declining to 1.75 by October 2020, then generally increased to a peak of 2.10 in April 2022 and again in April 2023. Following this, the ratio gradually decreased to 1.75 in November 2025. The changes indicate a variable but overall steady effectiveness in utilizing assets to generate sales, with peak asset utilization occurring around mid-2022 and mid-2023.

Financial Leverage

Financial leverage experienced noticeable variation throughout the periods. It declined from 4.01 in May 2020 to a low of 3.37 in May 2021, suggesting a reduction in the reliance on debt financing. Afterward, leverage rose steadily to a maximum of 5.05 in October 2022. Since then, it decreased again, ending at 3.87 in November 2025. This trend reflects strategic shifts in capital structure, with alternating phases of deleveraging and increased debt usage.

Return on Equity (ROE)

Return on equity demonstrated significant volatility. Starting at 24.8% in May 2020, it climbed sharply to a high of 54.37% in April 2022, pointing to highly effective utilization of shareholder equity during this period. However, after reaching this peak, ROE declined consistently to 24.28% by November 2025. The movement suggests a cycle of strong equity returns likely fueled by favorable earnings and leverage, followed by a period of normalization or decreased profitability.

Overall Analysis

The financial ratios collectively indicate a period of strong financial performance and operational efficiency culminating around late 2021 to mid-2022, characterized by elevated profitability, asset efficiency, and leverage. Subsequently, the company experienced a normalization phase with reduced profit margins and returns, a decrease in asset turnover and leverage, signaling a potential strategic repositioning or response to external conditions. The interplay among the ratios highlights the company’s adaptive management of assets, equity, and financing to balance growth and risk over the examined periods.

The financial ratios over the analyzed periods reveal several notable trends and variations in the company's operational efficiency, profitability, and capital structure.

Tax Burden

The tax burden ratio remains relatively stable throughout the periods, fluctuating narrowly around 0.77 to 0.81. This consistency suggests a steady effective tax rate with minimal volatility in tax-related expenses affecting net profits.

Interest Burden

The interest burden exhibits a slight upward trend, rising from 0.83 in late 2020 to about 0.93 by mid-2024 and maintaining this level thereafter. This indicates a gradual improvement in managing interest expenses relative to earnings before interest and taxes (EBIT), suggesting enhanced debt servicing capacity or favorable financing conditions over time.

EBIT Margin

Operating profitability, as measured by the EBIT margin, shows significant variability. Starting at approximately 5% in mid-2020, the margin peaks near 8.96% in May 2021, followed by a decline to around 3.56% in early 2023. Subsequently, there is a recovery trend bringing margins back toward the 5.0–5.8% range by early 2025. This pattern indicates cyclical factors or operational challenges impacting earnings before interest and taxes, with periods of both expansion and contraction.

Asset Turnover

Asset turnover shows a generally increasing trend from around 1.75 in mid-2020 to about 2.10 by mid-2023, reflecting enhanced efficiency in utilizing assets to generate sales. Post this peak, there is a mild downward movement to approximately 1.75 by late 2025, possibly indicating changes in asset base or sales levels affecting efficiency.

Financial Leverage

The financial leverage ratio fluctuates within a range of about 3.37 to 5.05, peaking around late 2022. After the peak, there is a gradual reduction in leverage levels toward the period ending in late 2025. This suggests an active approach in managing debt and equity proportions, possibly aimed at optimizing capital structure and reducing financial risk over time.

Return on Equity (ROE)

ROE demonstrates marked fluctuations corresponding with changes in operational performance and leverage. The rate surges from approximately 25% in mid-2020 to a peak above 54% by early 2022, then declines to about 23.4% in early 2023. A recovery trend follows, stabilizing in the 24–31% range into 2025. This trend indicates periods of strong profitability and effective use of equity capital, tempered by episodes of diminished returns likely due to lower operating margins or changes in leverage.

Overall, the company exhibits dynamic financial performance with periods of high profitability and efficiency, interspersed with phases of contraction and readjustment. Stability in tax and interest expense management supports consistent net profitability, while asset utilization and capital structure are actively managed to respond to operational conditions. The variations in ROE reflect these combined effects, highlighting the company's adaptive financial strategy over the examined timeframe.

The financial ratios of the company indicate distinct trends over the observed periods, reflecting fluctuations in profitability, efficiency, and asset utilization.

Net Profit Margin

The net profit margin exhibits an initial upward trajectory, rising from 3.46% to a peak of 6.56% around late 2021. This increase suggests improving profitability during that timeframe. However, following this peak, there is a notable decline to a low of approximately 2.49% in early 2023, indicating a period of reduced profitability. Subsequently, the margin stabilizes and slightly recovers, maintaining levels around 3.5% to 4.2% in the later periods. Despite the recovery, the margin does not return to its earlier peak values, highlighting some persistent profitability pressures.

Asset Turnover

The asset turnover ratio remains relatively steady throughout the periods, fluctuating within a narrow band from about 1.75 to 2.10. Early periods show a gradual increase, peaking near 2.10 around mid-2022 and mid-2023, which indicates an improvement in how efficiently the company uses its assets to generate sales. After these peaks, the ratio experiences slight declines but generally holds above 1.75, suggesting consistent asset utilization efficiency over time, with minor variations.

Return on Assets (ROA)

Return on Assets follows a pattern similar to net profit margin, with a strong ascent from 6.18% to over 12% peaking around early 2021. This reflects significantly enhanced overall asset profitability. However, this is followed by a pronounced drop to roughly 5.2% by early 2023, indicating diminished returns on the company's assets during that phase. Afterwards, ROA demonstrates a moderate recovery, stabilizing between approximately 6.3% and 8%, but does not approach its previous highs, consistent with the observed profit margin trends.

Collectively, these ratios reveal that the company experienced a period of heightened profitability and efficient asset utilization culminating around late 2021 to early 2022. The subsequent downturn in profitability metrics and ROA through early 2023 signals challenges impacting financial performance. The partial recovery seen later indicates some improvement but also suggests ongoing challenges in returning to earlier peak performance levels. Asset turnover stability throughout suggests that changes in profitability are less likely due to asset utilization variances and more likely related to margins and cost management factors.

The analysis of the quarterly financial indicators reveals a series of noteworthy trends over the observed period. Each ratio and margin provides insights into operational efficiency, profitability, and financial health.

Tax Burden

The tax burden ratio remains relatively stable, fluctuating narrowly between 0.77 and 0.81. This consistency suggests stable effective tax rates or tax expense relative to pre-tax income, contributing to predictable net profitability after taxes.

Interest Burden

The interest burden ratio exhibits moderate variability, beginning at 0.88 and generally increasing to peaks around 0.93 between early 2024 and mid-2025, before slightly stabilizing close to 0.92. This indicates an overall trend toward reduced interest expense relative to EBIT, implying improved efficiency in managing interest costs or a more favorable debt structure over time.

EBIT Margin

The EBIT margin displays a cyclical pattern with an initial increasing trend from about 5.0% to nearly 9.0% in mid-2021, followed by a decline to a low near 3.5% in early 2023. From there, the margin progressively recovers to roughly 5.0% by late 2025. These fluctuations may reflect varying operational performance, cost management, or revenue dynamics impacted by external market conditions or strategic decisions.

Asset Turnover

This ratio generally increases from approximately 1.75 to a peak of 2.10 around mid-2022, suggesting an improvement in asset utilization efficiency during this phase. Subsequent quarters show a gradual decline back to around 1.75 by late 2025, indicating a possible reduction in how effectively assets generate sales, which could be related to changes in asset base or sales volumes.

Return on Assets (ROA)

ROA progresses from about 6.2% in early 2020 to a notable peak exceeding 12% during 2021–early 2022, indicating enhanced profitability from assets. However, after this high, ROA declines to approximately 5.2% in early 2023 before experiencing a moderate recovery, stabilizing around 6.3% towards late 2025. This pattern mirrors the trends in EBIT margin and asset turnover, confirming the interplay of operational efficiency and profitability on asset returns.

In summary, the financial metrics reveal periods of improving operational efficiency and profitability up through 2021, followed by a downturn in profitability margins and asset efficiency around 2022 to early 2023. A partial recovery phase ensues thereafter, with most ratios stabilizing at moderate levels. The relatively stable tax burden alongside improvements in interest burden suggest prudent financial management during these cycles.

Tax Burden

The tax burden ratio remained relatively stable over the analyzed periods, fluctuating slightly around the 0.78 to 0.81 range. There was a minor increase to 0.81 in early 2023, followed by a gradual return to approximately 0.77 by late 2025, indicating consistent tax impact on earnings with minimal volatility.

Interest Burden

The interest burden displayed more variation, initially showing an increase from 0.88 to 0.91 in mid-2020, then decreasing to around 0.83 by late 2020. From 2021 onward, it rose steadily and stabilized between 0.90 and 0.93, reflecting improving management of interest expenses and a stable interest coverage position over time.

EBIT Margin

The EBIT margin showed a strong upward trend through early 2021, peaking near 8.96%, followed by variable declines and recoveries. Notably, a decrease occurred through 2022 with margins dropping to around 3.56% before gradually increasing again to about 5% by late 2025. This pattern suggests periods of fluctuating operating profitability with some recovery towards the end of the timeframe.

Net Profit Margin

The net profit margin closely mirrored the EBIT margin trends, rising significantly during 2020 to early 2021, achieving a peak near 6.56%. Subsequent quarters experienced declines to lows near 2.49%, followed by a steady rebound reaching approximately 3.95% before a slight dip towards the end of the period. This indicates variability in bottom-line profitability, influenced by operating performance and possibly other factors affecting net income.