Target Corp. (NYSE:TGT)

The analysis of the annual current and deferred income tax expenses reveals notable fluctuations and shifts in the provision for income taxes over the examined periods.

Current Income Tax Expense

The current income tax expense demonstrated a general upward trajectory from February 2020 through January 2022, increasing from 743 million US dollars to 1,439 million US dollars. This trend was interrupted in January 2023 by a sharp decline to 56 million US dollars, which represents a significant reduction. However, the current tax expense rebounded in the subsequent years, rising to 861 million US dollars by February 2024 and further to 1,350 million US dollars by February 2025. This pattern indicates substantial volatility in the current tax obligations during the period, with a notable dip in 2023 that was not sustained.

Deferred Income Tax Expense

The deferred income tax expense fluctuated between positive and negative values across the period. Starting at 178 million US dollars in February 2020, it turned negative in January 2021 (-184 million US dollars), then sharply increased to 522 million US dollars in January 2022 and remained high at 582 million US dollars in January 2023. Following that, it decreased to 298 million US dollars in February 2024 before turning negative again at -180 million US dollars in February 2025. This indicates variability in deferred tax liabilities or assets, reflecting changes in temporary differences affecting the deferred tax calculations.

Provision for Income Taxes

The provision for income taxes, representing the total tax expense, varied in line with the combined impacts of current and deferred taxes. It rose from 921 million US dollars in 2020 to a peak of 1,961 million US dollars in January 2022. This was followed by a decline to 638 million US dollars in January 2023, largely driven by the sharp decrease in current tax expense during the same period. The provision then increased again to 1,159 million US dollars in February 2024 and stabilized somewhat at 1,170 million US dollars by February 2025. The data suggests that the provision is closely tied to the movements in both current and deferred tax expenses, with notable volatility in the middle years.

Overall, the data demonstrates significant variability in both current and deferred income tax expenses, with particularly pronounced fluctuations occurring around 2023. The interplay between current and deferred tax components significantly influences the total provision for income taxes, highlighting the impact of timing differences and tax strategies on the company's tax expense profile.

Federal statutory tax rate

The federal statutory tax rate remained constant at 21% throughout all the periods analyzed, indicating a stable federal tax policy during these years.

State income taxes, net of the federal tax benefit

The state income taxes, net of the federal tax benefit, showed variability over the periods. The rate started at 3.7% in February 2020, decreased to 3.3% in January 2021, then increased again to 3.9% in January 2022. It dropped to its lowest point of 3.0% in January 2023, before rising to 3.8% in February 2024 and slightly decreasing to 3.7% in February 2025. This pattern indicates some fluctuations in state tax impacts, but with an overall slight downward trend between 2020 and 2023, followed by a rebound in the last two years.

International tax rate

The international tax component remained consistently negative throughout the periods, ranging between -1.4% and -1.1%. The lowest value was -2.1% in January 2023, which could reflect increased international tax benefits or credits in that year. However, the percentages show minor variation, pointing to relatively stable international tax treatment with slight increases in benefits or deductions over time.

Excess tax benefit related to share-based payments

The excess tax benefit related to share-based payments was consistently negative, indicating a tax cost. The magnitude fluctuated notably, starting at -0.4% in February 2020, increasing in its negative impact to -1.0% in January 2021, then slightly improving in January 2022 to -0.8%. Thereafter, it became more negative at -1.6% in January 2023. In the last two periods, the negative effect lessened considerably to -0.3% in February 2024 and further to -0.1% in February 2025. This trend suggests a reduction in the tax cost associated with share-based payments towards the end of the period.

Federal tax credits

Federal tax credits consistently contributed negatively, reducing the overall tax rate by between 0.5% and 1.5%. The highest credit impact was -1.5% in January 2023, which aligns with the reduced effective tax rate observed in that year. The credits fluctuated modestly but showed no clear upward or downward trend over the analyzed periods, consistently providing a tax benefit.

Other tax components

"Other" tax items had a minor negative impact on the tax rate, ranging between -0.1% and -0.5%. There was a slight increase in the negative impact over time, from -0.1% in early years to -0.5% in the last two periods, indicating a small but growing influence of miscellaneous tax factors.

Effective tax rate

The effective tax rate demonstrated some variability, beginning at 22.0% in February 2020, slightly decreasing to 21.2% in January 2021. It increased again to 22.0% in January 2022 but experienced a significant decline to 18.7% in January 2023, possibly driven by increased federal tax credits and a larger negative international tax component in that year. Subsequently, the rate rose back to 21.9% in February 2024 and slightly increased further to 22.2% in February 2025. This pattern shows a generally stable effective tax rate close to the federal statutory rate, with a notable one-year deviation that temporarily decreased the company's tax burden.

The analysis of the financial data reveals several noteworthy trends in the company's deferred tax assets and liabilities, as well as other related balances over the six-year period ending in February 2025.

Accrued and Deferred Compensation

This item shows a significant increase from 264 million USD in 2020 to a peak of 623 million USD in 2021, followed by a decline in subsequent years, settling around 423 million USD in 2025. The initial surge may indicate a temporary retention or bonus accrual, with normalization afterwards.

Accruals and Reserves Not Currently Deductible

There is a steady and consistent upward trend from 169 million USD in 2020 to 260 million USD in 2025, reflecting increasing reserves or accruals that have not yet become deductible, possibly indicating growing provisions or anticipated liabilities.

Self-Insured Benefits

Self-insured benefits increased gradually from 124 million USD in 2020 to 207 million USD in 2025, showing a consistent rise, which may suggest increasing costs or coverage related to these benefits.

Deferred Occupancy Income

This item declines moderately over the period, from 148 million USD in 2020 to 109 million USD in 2025, indicating a reduction in deferred income related to occupancy, possibly through recognition of revenue or changes in lease terms.

Lease Liabilities

Lease liabilities display a clear upward trend, rising steadily from 1,000 million USD in 2020 to 1,600 million USD in 2025. This reflects increased lease commitments, which could be due to new leases or extensions of existing lease agreements.

Other Deferred Tax Assets

The category identified as "Other" shows considerable fluctuation with an initial small decrease from 58 million USD in 2020 to 18 million USD in 2022, a sharp increase to 142 million USD in 2023, followed by a decline to 50 million USD in 2025. These fluctuations may correspond to ad hoc adjustments or reclassifications.

Gross Deferred Tax Assets

This figure grows from 1,763 million USD in 2020 to a steady increase reaching 2,649 million USD in 2025, demonstrating an overall build-up of deferred tax assets over time, underpinned by various components such as accrued compensation and reserves.

Property and Equipment (Negative Values)

The negative values for property and equipment deepen from -1,767 million USD in 2020 to a trough of -3,015 million USD in 2024, with a partial recovery to -2,830 million USD in 2025. This trend reflects capital investments or net book value changes, with some reduction in the final year that could be due to disposals or impairments.

Leased Assets (Negative Values)

Leased assets show a steady increase in negative amounts from -880 million USD in 2020 to -1,425 million USD in 2025, consistent with the rise in lease liabilities, suggesting substantial investments in or capitalization of leased property.

Inventory (Negative Values)

Inventory levels negatively impact deferred tax liabilities with fluctuations from -156 million USD in 2020, peaking at -594 million USD in 2023, then improving slightly to around -484 million USD in 2025. This volatility may relate to changes in inventory valuation or levels.

Other (Negative Values)

Other negative amounts increase from -74 million USD in 2020 to -203 million USD in 2025, indicating growing obligations or deferred taxes associated with miscellaneous items.

Gross Deferred Tax Liabilities

Gross deferred tax liabilities have risen significantly from -2,877 million USD in 2020 to a peak of -4,978 million USD in 2024, with a slight decrease to -4,942 million USD in 2025. This overall increase indicates growing deferred tax obligations, likely driven by the increasing property, leased assets, and inventory components.

Net Deferred Tax Asset (Liability)

The net position, calculated as gross deferred tax assets minus liabilities, shows an increasing net liability from -1,114 million USD in 2020 to a maximum of -2,472 million USD in 2024, followed by a modest reduction to -2,293 million USD in 2025. This suggests that deferred tax liabilities are growing at a faster pace than assets, potentially impacting future tax payments.

The analysis of deferred tax assets and deferred tax liabilities over the periods reveals distinct trends in these components of the company's financial position.

Deferred Tax Assets

The deferred tax assets exhibit volatility across the reported years. Starting at 8 million US dollars in February 2020, they increased significantly to 20 million in January 2021, then decreased sharply to 6 million in the subsequent two years (January 2022 and January 2023). There was a modest recovery observed in the final two periods, reaching 8 million in February 2024 and 10 million in February 2025. This fluctuation may indicate changes in temporary differences or tax planning strategies that affect the recognition of deferred tax assets.

Deferred Tax Liabilities

Deferred tax liabilities demonstrate a generally increasing trend over the examined years. Beginning at 1,122 million US dollars in February 2020, there was a decline to 990 million in January 2021. However, from January 2022 onwards, deferred tax liabilities increased markedly, peaking at 2,480 million in February 2024 before a slight decrease to 2,303 million in February 2025. This upward trend suggests a growing future tax obligation, likely arising from temporary differences such as accelerated depreciation or other timing differences affecting taxable income.

Overall, the data indicate that while deferred tax assets have fluctuated and remain relatively low, deferred tax liabilities have increased substantially over time. This divergence may reflect changes in the company's asset base, tax jurisdiction, or accounting policies influencing taxable temporary differences and the timing of tax payments.

The financial data presents a clear picture of asset growth, liability management, equity changes, and variations in net earnings over the observed periods.

Total Assets

Both reported and adjusted total assets show a consistent upward trend from 2020 through 2025. Reported total assets grew from approximately $42.8 billion in 2020 to $57.8 billion in 2025, reflecting a steady expansion of the asset base. Adjusted total assets closely follow this pattern with marginally lower values, indicating minor adjustments related to income tax effects but not materially altering the overall trend.

Total Liabilities

Reported total liabilities increased from about $30.9 billion in 2020 to $43.1 billion in 2025, showing a steady rise, though the pace moderates somewhat between 2023 and 2025. Adjusted total liabilities are consistently lower than reported liabilities by approximately $1 billion to $1.2 billion, implying that deferred tax adjustments have a significant effect in reducing the liability load on an adjusted basis. The adjusted liabilities also show growth over time but at a slightly more subdued rate compared to the reported figures.

Shareholders' Investment (Equity)

The reported shareholders’ investment demonstrates volatility, increasing from $11.8 billion in 2020 to a peak in 2021 around $14.4 billion, then declining to $11.2 billion in 2023 before rising again to $14.7 billion in 2025. In contrast, the adjusted shareholders’ investment shows a more consistent upward trend, increasing steadily from $12.9 billion in 2020 to $17.0 billion in 2025. The adjustment appears to smooth out fluctuations observed in reported equity, suggesting the impact of deferred income tax accounting stabilizes the equity value over time.

Net Earnings

Net earnings, both reported and adjusted, exhibit considerable volatility. Reported net earnings rise sharply from $3.3 billion in 2020 to $6.9 billion in 2022, then experience a significant decline to $2.8 billion in 2023, followed by a partial recovery to around $4.1 billion in 2024 and 2025. Adjusted net earnings follow a similar pattern but with some differences in magnitude, peaking slightly higher and recovering more strongly in 2023 with $3.4 billion compared to the reported $2.8 billion. The adjusted figures suggest some effect of deferred tax adjustments moderating the earnings volatility, yet a clear fluctuation remains.

Overall, the adjusted financial data, reflecting income tax effects, present a smoother and slightly more conservative view of the company’s equity and liabilities while showing consistent asset growth. Net earnings exhibit considerable variability influenced by operational performance and tax adjustments, highlighting areas for further investigation into the underlying causes of earnings fluctuations.

Net Profit Margin

The reported net profit margin experienced an increase from 4.2% in early 2020 to a peak of 6.55% in early 2022, followed by a marked decline to 2.55% in early 2023. It then showed a recovery, rising to 3.85% in early 2024 and remaining stable at 3.84% in early 2025. The adjusted net profit margin follows a similar trend but exhibits marginally higher values in 2022 and 2024 and slightly lower in 2025 compared to reported figures. This pattern suggests volatility in profitability with some correction for non-recurring tax effects.

Total Asset Turnover

The total asset turnover remained relatively stable over the years, starting at 1.83 in 2020 and increasing modestly to 2.05 by early 2023. A gradual decline is observed thereafter, returning close to the initial level by early 2025. Both reported and adjusted turnover ratios show almost identical values, indicating consistent asset utilization irrespective of tax-related adjustments.

Financial Leverage

Reported financial leverage increased from 3.62 in 2020, peaking at 4.75 in early 2023 before declining to 3.94 by early 2025. Adjusted financial leverage follows a similar pattern but remains consistently lower than reported figures, ranging from 3.3 to 3.97 over the periods. This divergence implies the presence of deferred tax effects influencing reported equity and liability structures, with leverage generally increasing until 2023 then reducing slightly.

Return on Equity (ROE)

The reported ROE shows notable growth, rising from 27.73% in early 2020 to an exceptional 54.15% in early 2022, then experiencing a sharp decline to 24.75% in early 2023. It recovers to around 30% in 2024 and 27.89% in 2025. Adjusted ROE mirrors this trend but consistently registers lower values, indicating that deferred tax adjustments reduce the net equity profitability. The substantial spike in 2022 suggests an unusual event or improved operational efficiency, tempered after adjustment.

Return on Assets (ROA)

Reported ROA rose from 7.67% in 2020 to a high of 12.91% in 2022, dipped considerably to 5.21% in 2023, then increased again to 7.48% in 2024 before slightly decreasing to 7.08% in 2025. Adjusted ROA follows a comparable but smoother trajectory with higher percentage points in all periods except 2025, indicative of the impact of non-operational tax items. The ROA trend suggests fluctuating efficiency in asset use contributing to profit, with a significant impact seen in 2023.

Reported Net Earnings

Reported net earnings showed significant fluctuations over the analyzed periods. Beginning at 3,281 million US dollars in early 2020, earnings increased steadily, peaking at 6,946 million in early 2022. However, this was followed by a sharp decline to 2,780 million in early 2023. Subsequently, there was a recovery with earnings rising to 4,138 million in early 2024, then slightly decreasing to 4,091 million in early 2025.

Adjusted Net Earnings

Adjusted net earnings followed a somewhat similar trajectory to reported net earnings but with less volatility in certain periods. Starting at 3,459 million US dollars in early 2020, adjusted earnings increased to 7,468 million in early 2022, which is higher than the peak in reported net earnings for the same period. There was a drop to 3,362 million in early 2023, followed by recovery to 4,436 million in early 2024. Adjusted earnings then decreased again to 3,911 million in early 2025, showing a somewhat more pronounced decline compared to the reported figures in the latest period.

Reported Net Profit Margin

Reported net profit margin experienced variability, starting at 4.2% in early 2020 before gradually rising to 6.55% in early 2022, indicating increased profitability efficiency. It then declined sharply to 2.55% in early 2023, signaling a reduction in profitability relative to revenue. The margin improved moderately thereafter, reaching 3.85% in early 2024 and remaining nearly constant at 3.84% in early 2025.

Adjusted Net Profit Margin

Adjusted net profit margin trends broadly mirror those of the reported margin but show slightly different magnitudes. Initially at 4.43% in early 2020, the margin peaked at 7.04% in early 2022, suggesting stronger profitability when adjustments are made. There was a drop to 3.08% in early 2023, which is higher than the reported margin for the same period, followed by an improvement to 4.13% in early 2024. The adjusted margin then decreased to 3.67% in early 2025, showing a downward trend in profitability efficiency after the rebound.

Overall Observations

Both reported and adjusted net earnings and profit margins exhibited a peak around early 2022, followed by a marked decline in early 2023 and a partial recovery thereafter. The adjusted figures generally present higher peaks and margins, indicating that accounting adjustments improve the measured profitability and earnings outcomes. The trends illustrate exposure to significant earnings volatility and changes in profit efficiency over the period, with recent years showing more moderated margins compared to the peak performance in 2022.

Total Assets

The reported total assets of the company demonstrated a steady growth trend over the analyzed periods. Starting from approximately 42.8 billion US dollars in early 2020, the total assets increased consistently each year, reaching roughly 57.8 billion US dollars by early 2025. This represents an overall asset growth of about 35% over the five-year span. The adjusted total assets closely mirror the reported figures, with negligible differences, indicating minimal adjustments due to income tax considerations during this time frame.

Total Asset Turnover

The reported total asset turnover ratio showed an initial stability, holding steady at 1.83 for both 2020 and 2021. A positive upward trend followed in 2022 and 2023, with the ratio peaking at 2.05 in early 2023. This suggests improved efficiency in generating revenue from each unit of assets during this period. However, a decline is observable in the subsequent years, falling to 1.94 in early 2024 and further down to approximately 1.84 by early 2025. The adjusted total asset turnover ratios follow a parallel pattern, confirming that tax-related adjustments did not materially affect operational efficiency measurements.

Overall Insights

The data indicate a strategic expansion of asset base coupled with fluctuating operational efficiency. While asset growth is consistent and robust, the asset turnover ratio's rise and fall pattern may reflect changes in sales volume, asset utilization, or market conditions impacting revenue generation. The close alignment between reported and adjusted figures suggests that income tax adjustments have minimal effect on these core financial metrics, allowing for a clear view of the company's operational performance.

The data reveals several significant trends in the financial position over the six-year period from early 2020 through early 2025. Total assets, both reported and adjusted, demonstrate a steady overall increase. Reported total assets rose from approximately 42.8 billion US dollars in early 2020 to 57.8 billion in early 2025, reflecting gradual growth with a slight slowdown in the 2022-2023 period. Adjusted total assets follow a nearly identical trajectory, confirming consistency between reported and adjusted measures.

Shareholders’ investment figures, both reported and adjusted, show more variability and distinct fluctuations compared to total assets. Reported shareholders’ investment initially increased substantially from 11.8 billion in 2020 to 14.4 billion in 2021 but then experienced a notable decline reaching a low point of 11.2 billion in 2023. The investment rebounded strongly thereafter, climbing to 14.7 billion by 2025. The adjusted shareholders’ investment follows a similar pattern but at consistently higher levels, indicating adjustments that increase equity estimates. This adjusted measure peaked at 15.4 billion in 2021, decreased through 2023, and then rose sharply to about 17.0 billion by 2025.

Financial leverage ratios display contrasting trends between reported and adjusted metrics. The reported financial leverage ratio decreased slightly from 3.62 in 2020 to 3.55 in 2021 before rising considerably to a peak of 4.75 in 2023, suggesting increased reliance on debt relative to equity during this period. It then declined to 3.94 in 2025, indicating some deleveraging or improved equity capitalization. Conversely, the adjusted financial leverage ratio remained consistently lower than the reported ratio, starting at 3.3 in 2020 and increasing moderately to 3.97 in 2023 before declining to 3.41 in 2025. This implies that after accounting for adjustments, the company's leverage risk appears more moderate and stable over time.

Overall, the analysis highlights a growing asset base coupled with fluctuating equity that impacts leverage levels. The adjusted data suggests a stronger equity position and less aggressive leveraging than the reported figures alone imply. The peak leverage in 2023, coinciding with the lowest point in shareholders’ investment, may reflect increased financial pressure during that year, followed by a recovery and strengthening equity structure by 2025. These patterns provide valuable insight into capital structure dynamics and potential risk exposures over the examined period.

The financial data presents both reported and adjusted figures for net earnings, shareholders’ investment, and return on equity (ROE) over a six-year period.

Net Earnings

The reported net earnings showed an increase from 3,281 million US dollars in 2020 to a peak of 6,946 million US dollars in 2022, followed by a sharp decline to 2,780 million in 2023. Subsequently, earnings rebounded somewhat to 4,138 million in 2024 and remained relatively stable at 4,091 million in 2025. The adjusted net earnings followed a similar pattern, reaching a high of 7,468 million in 2022, then declining to 3,362 million in 2023, and finally settling at 3,911 million by 2025. This indicates significant volatility in earnings, with both reported and adjusted figures reflecting the same cyclical trend but differing in magnitude.

Shareholders’ Investment

Reported shareholders’ investment initially increased from 11,833 million US dollars in 2020 to a high of 14,440 million in 2021, then declined to 11,232 million by 2023. However, it rose again to 13,432 million in 2024 and continued to climb to 14,666 million in 2025. The adjusted shareholders’ investment consistently exceeded the reported figures for each year, rising from 12,947 million in 2020 to 15,910 million in 2024 and further to 16,959 million in 2025. This suggests that adjustments, possibly related to deferred taxes, have resulted in a higher base of shareholders' equity, which has demonstrated a general upward trend despite fluctuations in reported amounts.

Return on Equity (ROE)

Reported ROE rose from 27.73% in 2020 to a sharp peak of 54.15% in 2022 before declining to 24.75% in 2023. It then increased to 30.81% in 2024 and declined slightly to 27.89% in 2025. Adjusted ROE presented a similar trajectory but at generally lower levels, starting at 26.72% in 2020, peaking at 51.9% in 2022, and then falling to 25.05% in 2023. In the last two years, it further declined to 27.89% in 2024 and 23.06% in 2025. The volatility and peak in 2022 indicate an exceptional year in terms of profitability relative to equity, followed by normalization in subsequent years. The consistently lower adjusted ROE highlights the effect of accounting adjustments on profitability measures.

Overall, the data indicates notable fluctuations in earnings and profitability with a significant spike in 2022 followed by a correction. Shareholders’ investment, especially when adjusted, shows a general growth trend, indicating strengthening equity capital over time despite variability in net earnings. Differences between reported and adjusted figures suggest that deferred income tax adjustments have a material impact on the evaluation of financial performance and position.

The financial data reveals several notable trends in the company's reported and adjusted figures over the six-year period.

Net Earnings

Reported net earnings displayed a significant increase from 3,281 million USD in 2020 to 6,946 million USD in 2022, followed by a sharp decline to 2,780 million USD in 2023. Subsequently, there was a recovery trend with reported earnings rising to 4,138 million USD in 2024 and stabilizing slightly at 4,091 million USD in 2025. Adjusted net earnings generally followed a similar pattern, starting at 3,459 million USD in 2020, peaking at 7,468 million USD in 2022, then dropping to 3,362 million USD in 2023, before increasing again to 4,436 million USD in 2024, and declining marginally to 3,911 million USD in 2025.

Total Assets

Both reported and adjusted total assets exhibited a steady upward trend throughout the period. Reported total assets increased from 42,779 million USD in 2020 to 57,769 million USD in 2025. Adjusted total assets closely mirrored this trajectory, starting at 42,771 million USD and reaching 57,759 million USD by 2025, indicating a marginal adjustment effect on asset values.

Return on Assets (ROA)

Reported ROA showed an improvement from 7.67% in 2020 peaking at 12.91% in 2022, followed by a decline to 5.21% in 2023. There was a partial recovery in 2024 with an ROA of 7.48%, slightly decreasing to 7.08% in 2025. Adjusted ROA followed a similar path but generally reported higher values, reaching 13.88% in 2022, then dropping to 6.3% in 2023. It subsequently improved to 8.01% in 2024, decreasing slightly to 6.77% in 2025. This indicates variations in profitability when adjusting for reported versus deferred income taxes.

Overall, the data depicts a period of growth interrupted by a pronounced dip in earnings and profitability in 2023, followed by a gradual recovery. Asset base expansion remains consistent, suggesting ongoing investment or acquisition activities. The differences between reported and adjusted figures highlight the impact of tax-related adjustments on earnings and profitability metrics.