Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Statement of Comprehensive Income
- Common-Size Income Statement
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Sales (P/S) since 2005
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Profitability Ratios (Summary)
Target Corp., profitability ratios
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).
- Gross profit margin
- The gross profit margin exhibited a relatively stable trend around 29% during the initial three years (2020 to 2022), followed by a notable decline to 24.57% in 2023. Subsequently, it recovered partially to 27.54% in 2024 and increased slightly to 28.21% in 2025, suggesting some recovery in cost management or pricing strategies after the dip.
- Operating profit margin
- The operating profit margin showed an upward trajectory from 5.96% in 2020 to a peak of 8.44% in 2022, indicating improving operational efficiency or cost control. However, this was followed by a sharp drop to 3.53% in 2023. The margin rebounded moderately in 2024 to 5.31% and remained stable at 5.22% in 2025, reflecting some operational challenges and partial recovery.
- Net profit margin
- The net profit margin mirrored the operating profit margin's pattern, increasing from 4.2% in 2020 to a high of 6.55% in 2022, before declining significantly to 2.55% in 2023. It then improved to 3.85% in 2024 and stabilized slightly at 3.84% in 2025, indicating variability in profitability after operating results and potentially influenced by other income statement factors.
- Return on equity (ROE)
- Return on equity increased steadily from 27.73% in 2020 to a remarkable 54.15% in 2022, reflecting highly efficient use of shareholders' equity during this period. However, it dramatically declined to 24.75% in 2023, followed by moderate rises to 30.81% in 2024 and 27.89% in 2025. This suggests considerable volatility in equity returns, possibly due to fluctuating net income or changes in equity levels.
- Return on assets (ROA)
- Return on assets showed growth from 7.67% in 2020 to 12.91% in 2022, indicating improved asset utilization. This was followed by a steep fall to 5.21% in 2023, with gradual recoveries to 7.48% in 2024 and a slight decrease to 7.08% in 2025. This pattern highlights challenges in generating asset returns post-2022 and a partial recovery in the subsequent years.
Return on Sales
Return on Investment
Gross Profit Margin
Target Corp., gross profit margin calculation, comparison to benchmarks
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Gross margin | |||||||
| Net sales | |||||||
| Profitability Ratio | |||||||
| Gross profit margin1 | |||||||
| Benchmarks | |||||||
| Gross Profit Margin, Competitors2 | |||||||
| 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 2025 Calculation
Gross profit margin = 100 × Gross margin ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Sales
- Net sales displayed a generally upward trend from 2020 through 2023, increasing from $78,112 million in 2020 to a peak of $109,120 million in 2023. However, in the subsequent two years, sales slightly declined to $107,412 million in 2024 and further to $106,566 million in 2025, indicating a modest contraction after reaching its peak.
- Gross Margin
- The gross margin increased steadily from $23,248 million in 2020 to a high of $31,042 million in 2022. Following this peak, it declined to $26,814 million in 2023 but then rebounded to $29,584 million in 2024 and continued to increase slightly to $30,064 million in 2025. This pattern suggests some volatility in gross margin during the latter period but a general recovery after the dip in 2023.
- Gross Profit Margin Percentage
- The gross profit margin percentage remained relatively stable around 29% from 2020 to 2022, indicating consistent profitability relative to sales. However, there was a noticeable decline in 2023 to 24.57%, representing a significant decrease in profitability that year. Subsequent years show a recovery to 27.54% in 2024 and 28.21% in 2025, although it had not fully returned to the earlier peak levels by 2025.
- Overall Analysis
- The data reveals steady growth in net sales and gross margin from 2020 through 2022, paired with stable profit margins. The year 2023 marks a period of stress, with declines in both gross margin and profit margin percentage, despite net sales peaking. This could suggest increased costs or pricing pressures affecting profitability. The following years, 2024 and 2025, show recovery in gross margin and profit margins, though net sales slightly decreased, indicating possible adjustments in business strategy or market conditions.
Operating Profit Margin
Target Corp., operating profit margin calculation, comparison to benchmarks
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Operating income | |||||||
| Net sales | |||||||
| Profitability Ratio | |||||||
| Operating profit margin1 | |||||||
| Benchmarks | |||||||
| Operating Profit Margin, Competitors2 | |||||||
| Costco Wholesale Corp. | |||||||
| Walmart Inc. | |||||||
| Operating Profit Margin, Sector | |||||||
| Consumer Staples Distribution & Retail | |||||||
| Operating Profit Margin, Industry | |||||||
| Consumer Staples | |||||||
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 2025 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Sales
- Net sales show a generally increasing trend from 78,112 million US dollars in early 2020 to a peak of 109,120 million US dollars in early 2023. Following this peak, there is a slight decline to 107,412 million in early 2024 and further marginal decrease to 106,566 million in early 2025.
- Operating Income
- Operating income increased significantly from 4,658 million US dollars in 2020 to a high of 8,946 million in 2022. However, it experienced a considerable drop to 3,848 million in 2023. Subsequent years show a partial recovery with operating income reaching 5,707 million in 2024 and slightly decreasing to 5,566 million in 2025.
- Operating Profit Margin
- The operating profit margin improved steadily from 5.96% in 2020 to a peak of 8.44% in 2022, indicating enhanced operational efficiency or profitability during this period. This was followed by a sharp decline to 3.53% in 2023. The margin then partially rebounds to around 5.3% in 2024 and stabilizes slightly lower at 5.22% in 2025.
- Summary of Trends
- The data indicates an initial phase of strong growth in sales and operational profitability through 2022, culminating in peak figures across all key metrics. In 2023, there is a notable downturn in operating income and margin despite relatively stable sales, suggesting increased costs or operational challenges. The partial recovery in 2024 and stabilization in 2025 reflect a moderate improvement, but profitability levels remain below the peak attained in 2022. This pattern may warrant further investigation into cost structure and efficiency measures implemented after 2022.
Net Profit Margin
Target Corp., net profit margin calculation, comparison to benchmarks
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net earnings | |||||||
| Net sales | |||||||
| Profitability Ratio | |||||||
| Net profit margin1 | |||||||
| Benchmarks | |||||||
| Net Profit Margin, Competitors2 | |||||||
| Costco Wholesale Corp. | |||||||
| Walmart Inc. | |||||||
| Net Profit Margin, Sector | |||||||
| Consumer Staples Distribution & Retail | |||||||
| Net Profit Margin, Industry | |||||||
| Consumer Staples | |||||||
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 2025 Calculation
Net profit margin = 100 × Net earnings ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Earnings
- The net earnings exhibited significant variability over the observed periods. Starting at 3,281 million US dollars in early 2020, the figure increased to a peak of 6,946 million US dollars by early 2022. However, this was followed by a sharp decline to 2,780 million US dollars in early 2023. Subsequently, net earnings recovered moderately, reaching approximately 4,100 million US dollars in the latest periods.
- Net Sales
- Net sales showed a consistent upward trend from 78,112 million US dollars in early 2020 to a maximum recording of 109,120 million US dollars in early 2023. Post this peak, there was a slight decline in the last two reported periods, settling around 106,500 million US dollars, which may indicate stabilization or mild contraction after a period of growth.
- Net Profit Margin
- The net profit margin followed a pattern closely aligned with net earnings variations. It increased from 4.2% in early 2020 to a high of 6.55% in early 2022, suggesting improved profitability. This was followed by a significant drop to 2.55% in early 2023, matching the decline in net earnings. The margin then modestly recovered to the mid-3% range in subsequent periods, indicating some restoration of profit efficiency but still below the earlier peak.
- Overall Trends and Insights
- The data indicate a period of growth in sales and profitability up to early 2022, followed by notable declines in net earnings and profit margins despite relatively high sales volumes. The decline in profitability in early 2023 could suggest increased costs, pricing pressures, or other operational challenges affecting earnings quality. The partial recovery in earnings and profit margin in the last two periods points to a potential stabilization phase, though profitability has not returned to prior peak levels. The steady sales figures in the latter periods imply consistent revenue generation, even as profit margins are under pressure.
Return on Equity (ROE)
Target Corp., ROE calculation, comparison to benchmarks
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net earnings | |||||||
| Shareholders’ investment | |||||||
| Profitability Ratio | |||||||
| ROE1 | |||||||
| Benchmarks | |||||||
| ROE, Competitors2 | |||||||
| Costco Wholesale Corp. | |||||||
| Walmart Inc. | |||||||
| ROE, Sector | |||||||
| Consumer Staples Distribution & Retail | |||||||
| ROE, Industry | |||||||
| Consumer Staples | |||||||
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 2025 Calculation
ROE = 100 × Net earnings ÷ Shareholders’ investment
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net earnings
- Net earnings exhibited notable fluctuations over the analyzed periods. Initially, there was a significant growth from 3,281 million USD in early 2020 to 6,946 million USD by early 2022, indicating a strong upward trend in profitability during this period. However, this was followed by a sharp decline to 2,780 million USD in early 2023, representing a substantial reduction in net earnings. Subsequently, net earnings recovered somewhat, increasing to 4,138 million USD in early 2024 but then showed a minor decline to 4,091 million USD by early 2025. Overall, the trend reveals volatility with a peak in 2022 and partial recovery thereafter.
- Shareholders’ investment
- Shareholders' investment values displayed moderate variation throughout the periods. Beginning at 11,833 million USD in 2020, the investment increased to 14,440 million USD by 2021, then decreased to 11,232 million USD by 2023, indicating some divestment or capital reduction during those years. Following this, there was a rebound, with shareholders’ investment rising steadily to 14,666 million USD by 2025. The pattern suggests fluctuations possibly linked to changes in company financing or return policies.
- Return on Equity (ROE)
- The ROE demonstrates a pattern consistent with net earnings fluctuations, though with more pronounced variability. The ROE increased from 27.73% in 2020 to a peak of 54.15% in 2022, reflecting an exceptionally high return relative to shareholders' equity during this period. Following the peak, ROE dropped sharply to 24.75% in 2023, aligning with the decline in net earnings. It then increased moderately to 30.81% in 2024 before slightly declining to 27.89% in 2025. This trend indicates periods of both high profitability efficiency and more normalized returns.
- Overall insights
- The data illustrate a period of strong financial performance culminating in 2022, characterized by peak net earnings and ROE. Subsequently, the company experienced a notable decline in earnings and profitability metrics in 2023, followed by a recovery phase with partial stabilization of earnings and investment levels. The fluctuations in shareholders' investment correlate with changes in profitability, suggesting responsive capital management. The volatility in ROE indicates that the company's return efficiency faced significant challenges post-2022 but remained at levels that still reflect positive value generation for shareholders.
Return on Assets (ROA)
Target Corp., ROA calculation, comparison to benchmarks
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net earnings | |||||||
| Total assets | |||||||
| Profitability Ratio | |||||||
| ROA1 | |||||||
| Benchmarks | |||||||
| ROA, Competitors2 | |||||||
| Costco Wholesale Corp. | |||||||
| Walmart Inc. | |||||||
| ROA, Sector | |||||||
| Consumer Staples Distribution & Retail | |||||||
| ROA, Industry | |||||||
| Consumer Staples | |||||||
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 2025 Calculation
ROA = 100 × Net earnings ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Earnings
- Net earnings exhibited notable fluctuations during the observed periods. Initially, there was a significant increase from 3,281 million US dollars in early 2020 to 6,946 million US dollars in early 2022. However, this peak was followed by a sharp decline to 2,780 million US dollars in early 2023. Subsequently, net earnings recovered moderately, reaching 4,138 million US dollars in early 2024 and stabilizing slightly lower at 4,091 million US dollars by early 2025.
- Total Assets
- Total assets showed a consistent upward trend throughout the entire period. Starting from 42,779 million US dollars in early 2020, assets grew steadily each year, exceeding 57,000 million US dollars by early 2025. The progression suggests ongoing asset accumulation and potential investment or expansion activities.
- Return on Assets (ROA)
- ROA values reflected considerable volatility. From an initial 7.67% in early 2020, the ratio increased to a peak of 12.91% in early 2022, coinciding with the highest net earnings. Thereafter, ROA dropped sharply to 5.21% in early 2023, mirroring the decline in profitability. The subsequent years saw modest improvement, with ROA climbing to 7.48% in early 2024 and slightly decreasing to 7.08% by early 2025, indicating a partial recovery in asset efficiency.
- Summary
- Overall, the data reveals a cycle of growth and contraction in profitability over the five-year span, despite a consistently expanding asset base. The peak in net earnings and ROA in early 2022 suggests a period of strong operational performance, followed by a downturn in the next year. The recovery phase after 2023 points to efforts to regain profitability, although efficiency metrics have not yet returned to prior highs. The steady increase in total assets may indicate ongoing strategic investments that could potentially support future earnings improvements.