Target Corp. (NYSE:TGT)

The financial data reveals several notable trends in profitability, investment, and cost of capital over the given periods.

Net Operating Profit After Taxes (NOPAT)

NOPAT increased significantly from 3,896 million in early 2020 to a peak of 7,872 million by early 2022, indicating strong operating performance. However, this was followed by a sharp decline to 3,821 million in early 2023, with a moderate recovery to 4,953 million in 2024 and a slight decrease again in 2025 to 4,376 million. The fluctuations suggest volatility in operating profitability during the latter periods.

Cost of Capital

The cost of capital showed an initial increasing trend, rising from 12.81% in 2020 to a peak of 13.72% in early 2022. Afterward, it steadily declined to 12.14% by early 2025. This trend implies that the company faced gradually higher capital costs until 2022 but benefited from lower capital costs in the subsequent years, potentially improving investment efficiency.

Invested Capital

Invested capital grew consistently from 27,256 million in 2020 to 36,107 million by 2025. This steady increase suggests ongoing capital deployment in the business, reflecting expansion or reinvestment strategies over the period despite fluctuations in profitability.

Economic Profit

Economic profit followed a volatile trajectory, initially rising from 405 million in 2020 to a high of 3,734 million in 2022, which corresponds with the peak in NOPAT and indicates strong value creation. However, it dropped sharply to a negative 151 million in 2023, then recovered modestly to 436 million in 2024, but again approached zero at -7 million in 2025. This volatility reflects changes in profitability relative to capital costs and invested capital, suggesting challenges in consistently generating returns above the cost of capital in recent years.

Overall, the data shows a peak in profitability and value creation around early 2022, disrupted by significant declines afterward. Despite increasing invested capital, the ability to generate economic profit above the cost of capital has been weakened recently, raising concerns about the efficiency of invested resources and operational performance stability.

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.

Economic Profit

Economic profit shows significant volatility over the observed periods. It increased from 405 million USD to a peak of 3734 million USD by early 2022, indicating a substantial improvement in profitability during this timeframe. However, the subsequent periods reveal a sharp decline, turning negative at -151 million USD in early 2023, before slightly recovering to 436 million USD in early 2024, and then declining again to a marginally negative value of -7 million USD by early 2025. This pattern suggests fluctuating economic returns with difficulties in maintaining consistent profitability.

Invested Capital

The invested capital demonstrates a generally upward trend throughout the periods. Starting at 27,256 million USD, it grew to 30,495 million USD by early 2021 and remained relatively stable into early 2023. From early 2023 onwards, invested capital increased more noticeably, reaching 34,307 million USD in early 2024 and further to 36,107 million USD by early 2025. This steady rise indicates ongoing or increased asset investment or capital allocation over time.

Economic Spread Ratio

The economic spread ratio displays considerable fluctuations. It starts at 1.49% in early 2020 and improves significantly to 12.38% by early 2022, reflecting a period of enhanced return on invested capital exceeding the cost of capital. However, a sharp decline follows, turning negative to -0.5% in early 2023, indicating economic value destruction during that period. The ratio then slightly recovers to 1.27% in early 2024 but drops again close to zero at -0.02% by early 2025. These variations suggest challenges in sustaining returns above the cost of capital consistently.

Net Sales

Net sales demonstrated a consistent upward trend from 2020 to 2023, increasing steadily from approximately 78.1 billion USD to about 109.1 billion USD. However, starting in 2024, net sales experienced a slight decline, decreasing to roughly 107.4 billion USD, and this downward movement continued marginally into 2025, reaching around 106.6 billion USD. This pattern suggests a period of robust growth followed by stabilization or mild contraction in revenue generation.

Economic Profit

The economic profit showed notable volatility over the observed period. From 2020 through 2022, economic profit increased significantly, peaking at approximately 3.7 billion USD in 2022. This represents a strong enhancement in the company's value creation. However, the subsequent years saw a sharp reversal, with economic profit turning negative in 2023 to about -151 million USD, before only partially recovering to 436 million USD in 2024 and dropping again to a marginal negative figure in 2025. This volatility indicates challenges in sustaining profitability beyond operating performance improvements.

Economic Profit Margin

The economic profit margin mirrored the economic profit trend, showing an increase from 0.52% in 2020 to a peak of 3.52% in 2022. This rise indicates improved efficiency or profitability relative to net sales during this period. However, in 2023, the margin turned negative to -0.14%, reflecting a loss in economic profit margin despite stable sales figures. There was a modest recovery to 0.41% in 2024, followed by a near-neutral margin of -0.01% in 2025. This fluctuation in margin underscores variability in cost management or capital cost considerations impacting overall economic profitability.