Profitability Analysis

Difficulty level: Basic


Ratios (Summary)

Target Corp., profitability ratios

 
Jan 31, 2015 Feb 1, 2014 Feb 2, 2013 Jan 28, 2012 Jan 29, 2011 Jan 30, 2010
Return on Sales
Gross profit margin 29.39% 29.53% 29.73% 30.10% 30.49% 30.54%
Operating profit margin 6.25% 5.83% 7.46% 7.77% 7.98% 7.37%
Net profit margin -2.25% 2.72% 4.17% 4.28% 4.44% 3.92%
Return on Investment
Return on equity (ROE) -11.69% 12.14% 18.11% 18.51% 18.85% 16.21%
Return on assets (ROA) -3.95% 4.42% 6.23% 6.28% 6.68% 5.59%

Source: Based on data from Target Corp. Annual Reports

Ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. Target Corp.'s gross profit margin deteriorated from 2013 to 2014 and from 2014 to 2015.
Operating profit margin A profitability ratio calculated as operating income divided by revenue. Target Corp.'s operating profit margin deteriorated from 2013 to 2014 but then slightly improved from 2014 to 2015.
Net profit margin An indicator of profitability, calculated as net income divided by revenue. Target Corp.'s net profit margin deteriorated from 2013 to 2014 and from 2014 to 2015.
ROE A profitability ratio calculated as net income divided by shareholders' equity. Target Corp.'s ROE deteriorated from 2013 to 2014 and from 2014 to 2015.
ROA A profitability ratio calculated as net income divided by total assets. Target Corp.'s ROA deteriorated from 2013 to 2014 and from 2014 to 2015.

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Gross Profit Margin

Target Corp., gross profit margin calculation

 
Jan 31, 2015 Feb 1, 2014 Feb 2, 2013 Jan 28, 2012 Jan 29, 2011 Jan 30, 2010
Selected Financial Data (USD $ in millions)
Gross margin 21,340  21,436  21,392  20,606  20,061  19,373 
Sales 72,618  72,596  71,960  68,466  65,786  63,435 
Ratio
Gross profit margin1 29.39% 29.53% 29.73% 30.10% 30.49% 30.54%
Benchmarks
Gross Profit Margin, Competitors
Amazon.com Inc. –% 29.48% 27.23% 24.75% 22.44% 22.35%
Wal-Mart Stores Inc. 24.29% 24.31% 24.38% 24.50% 24.74% 24.78%

Source: Based on data from Target Corp. Annual Reports

2015 Calculations

1 Gross profit margin = 100 × Gross margin ÷ Sales
= 100 × 21,340 ÷ 72,618 = 29.39%

Ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. Target Corp.'s gross profit margin deteriorated from 2013 to 2014 and from 2014 to 2015.

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Operating Profit Margin

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

 
Jan 31, 2015 Feb 1, 2014 Feb 2, 2013 Jan 28, 2012 Jan 29, 2011 Jan 30, 2010
Selected Financial Data (USD $ in millions)
Earnings from continuing operations before interest expense and income taxes 4,535  4,229  5,371  5,322  5,252  4,673 
Sales 72,618  72,596  71,960  68,466  65,786  63,435 
Ratio
Operating profit margin1 6.25% 5.83% 7.46% 7.77% 7.98% 7.37%
Benchmarks
Operating Profit Margin, Competitors
Amazon.com Inc. –% 0.20% 1.00% 1.11% 1.79% 4.11%
Wal-Mart Stores Inc. 5.63% 5.68% 5.96% 5.98% 6.10% 5.91%
Operating Profit Margin, Sector
Broadline Retailers –% 4.93% 5.54% 5.68% 5.94% 5.97%
Operating Profit Margin, Industry
Consumer Services –% 8.06% 8.05% 8.00% 8.05% 7.68%

Source: Based on data from Target Corp. Annual Reports

2015 Calculations

1 Operating profit margin = 100 × Earnings from continuing operations before interest expense and income taxes ÷ Sales
= 100 × 4,535 ÷ 72,618 = 6.25%

Ratio Description The company
Operating profit margin A profitability ratio calculated as operating income divided by revenue. Target Corp.'s operating profit margin deteriorated from 2013 to 2014 but then slightly improved from 2014 to 2015.

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Net Profit Margin

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

 
Jan 31, 2015 Feb 1, 2014 Feb 2, 2013 Jan 28, 2012 Jan 29, 2011 Jan 30, 2010
Selected Financial Data (USD $ in millions)
Net earnings (loss) (1,636) 1,971  2,999  2,929  2,920  2,488 
Sales 72,618  72,596  71,960  68,466  65,786  63,435 
Ratio
Net profit margin1 -2.25% 2.72% 4.17% 4.28% 4.44% 3.92%
Benchmarks
Net Profit Margin, Competitors
Amazon.com Inc. –% -0.27% 0.37% -0.06% 1.31% 3.37%
Wal-Mart Stores Inc. 3.39% 3.39% 3.65% 3.54% 3.91% 3.54%
Net Profit Margin, Sector
Broadline Retailers –% 2.80% 3.31% 3.24% 3.74% 3.58%
Net Profit Margin, Industry
Consumer Services –% 4.69% 5.14% 4.59% 4.87% 4.54%

Source: Based on data from Target Corp. Annual Reports

2015 Calculations

1 Net profit margin = 100 × Net earnings (loss) ÷ Sales
= 100 × -1,636 ÷ 72,618 = -2.25%

Ratio Description The company
Net profit margin An indicator of profitability, calculated as net income divided by revenue. Target Corp.'s net profit margin deteriorated from 2013 to 2014 and from 2014 to 2015.

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Return on Equity (ROE)

Target Corp., ROE calculation, comparison to benchmarks

 
Jan 31, 2015 Feb 1, 2014 Feb 2, 2013 Jan 28, 2012 Jan 29, 2011 Jan 30, 2010
Selected Financial Data (USD $ in millions)
Net earnings (loss) (1,636) 1,971  2,999  2,929  2,920  2,488 
Shareholders' investment 13,997  16,231  16,558  15,821  15,487  15,347 
Ratio
ROE1 -11.69% 12.14% 18.11% 18.51% 18.85% 16.21%
Benchmarks
ROE, Competitors
Amazon.com Inc. –% -2.24% 2.81% -0.48% 8.13% 16.78%
Wal-Mart Stores Inc. 20.10% 21.01% 22.27% 22.01% 23.91% 20.26%
ROE, Sector
Broadline Retailers –% 17.20% 19.75% 19.50% 21.72% 19.34%
ROE, Industry
Consumer Services –% 17.71% 17.83% 15.66% 15.82% 13.88%

Source: Based on data from Target Corp. Annual Reports

2015 Calculations

1 ROE = 100 × Net earnings (loss) ÷ Shareholders' investment
= 100 × -1,636 ÷ 13,997 = -11.69%

Ratio Description The company
ROE A profitability ratio calculated as net income divided by shareholders' equity. Target Corp.'s ROE deteriorated from 2013 to 2014 and from 2014 to 2015.

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Return on Assets (ROA)

Target Corp., ROA calculation, comparison to benchmarks

 
Jan 31, 2015 Feb 1, 2014 Feb 2, 2013 Jan 28, 2012 Jan 29, 2011 Jan 30, 2010
Selected Financial Data (USD $ in millions)
Net earnings (loss) (1,636) 1,971  2,999  2,929  2,920  2,488 
Total assets 41,404  44,553  48,163  46,630  43,705  44,533 
Ratio
ROA1 -3.95% 4.42% 6.23% 6.28% 6.68% 5.59%
Benchmarks
ROA, Competitors
Amazon.com Inc. –% -0.44% 0.68% -0.12% 2.50% 6.13%
Wal-Mart Stores Inc. 8.03% 7.83% 8.37% 8.12% 9.07% 8.40%
ROA, Sector
Broadline Retailers –% 5.84% 6.96% 6.82% 7.99% 7.68%
ROA, Industry
Consumer Services –% 6.67% 7.20% 6.41% 6.69% 6.35%

Source: Based on data from Target Corp. Annual Reports

2015 Calculations

1 ROA = 100 × Net earnings (loss) ÷ Total assets
= 100 × -1,636 ÷ 41,404 = -3.95%

Ratio Description The company
ROA A profitability ratio calculated as net income divided by total assets. Target Corp.'s ROA deteriorated from 2013 to 2014 and from 2014 to 2015.

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