Stock Analysis on Net

Target Corp. (NYSE:TGT)

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

Target Corp., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Feb 1, 2025 Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020
Net operating profit after taxes (NOPAT)1 4,376 4,953 3,821 7,872 5,024 3,896
Cost of capital2 12.14% 13.17% 13.15% 13.73% 13.61% 12.81%
Invested capital3 36,107 34,307 30,226 30,151 30,495 27,256
 
Economic profit4 (8) 435 (152) 3,733 872 404

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 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 4,37612.14% × 36,107 = -8

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Target Corp. economic profit increased from 2023 to 2024 but then slightly decreased from 2024 to 2025 not reaching 2023 level.

Net Operating Profit after Taxes (NOPAT)

Target Corp., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Feb 1, 2025 Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020
Net earnings 4,091 4,138 2,780 6,946 4,368 3,281
Deferred income tax expense (benefit)1 (180) 298 582 522 (184) 178
Increase (decrease) in equity equivalents2 (180) 298 582 522 (184) 178
Net interest expense 411 502 478 421 977 477
Interest expense, operating lease liability3 177 152 103 90 86 92
Adjusted net interest expense 588 654 581 511 1,063 569
Tax benefit of net interest expense4 (124) (137) (122) (107) (223) (119)
Adjusted net interest expense, after taxes5 465 517 459 404 840 449
(Income) loss from discontinued operations, net of tax6 (12)
Net operating profit after taxes (NOPAT) 4,376 4,953 3,821 7,872 5,024 3,896

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 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in equity equivalents to net earnings.

3 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 3,935 × 4.51% = 177

4 2025 Calculation
Tax benefit of net interest expense = Adjusted net interest expense × Statutory income tax rate
= 588 × 21.00% = 124

5 Addition of after taxes interest expense to net earnings.

6 Elimination of discontinued operations.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Target Corp. NOPAT increased from 2023 to 2024 but then slightly decreased from 2024 to 2025 not reaching 2023 level.

Cash Operating Taxes

Target Corp., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Feb 1, 2025 Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020
Provision for income taxes 1,170 1,159 638 1,961 1,178 921
Less: Deferred income tax expense (benefit) (180) 298 582 522 (184) 178
Add: Tax savings from net interest expense 124 137 122 107 223 119
Cash operating taxes 1,474 998 178 1,546 1,585 862

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).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Target Corp. cash operating taxes increased from 2023 to 2024 and from 2024 to 2025.

Invested Capital

Target Corp., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Feb 1, 2025 Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020
Current portion of long-term debt and other borrowings 1,636 1,116 130 171 1,144 161
Long-term debt and other borrowings, excluding current portion 14,304 14,922 16,009 13,549 11,536 11,338
Operating lease liability1 3,935 3,608 2,934 2,747 2,429 2,475
Total reported debt & leases 19,875 19,646 19,073 16,467 15,109 13,974
Shareholders’ investment 14,666 13,432 11,232 12,827 14,440 11,833
Net deferred tax (assets) liabilities2 2,293 2,472 2,190 1,561 970 1,114
Equity equivalents3 2,293 2,472 2,190 1,561 970 1,114
Accumulated other comprehensive (income) loss, net of tax4 458 460 419 553 756 868
Adjusted shareholders’ investment 17,417 16,364 13,841 14,941 16,166 13,815
Construction-in-progress5 (1,185) (1,703) (2,688) (1,257) (780) (533)
Invested capital 36,107 34,307 30,226 30,151 30,495 27,256

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 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of equity equivalents to shareholders’ investment.

4 Removal of accumulated other comprehensive income.

5 Subtraction of construction-in-progress.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Target Corp. invested capital increased from 2023 to 2024 and from 2024 to 2025.

Cost of Capital

Target Corp., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 48,874 48,874 ÷ 67,923 = 0.72 0.72 × 15.67% = 11.27%
Long-term debt and other borrowings, including current portion3 15,114 15,114 ÷ 67,923 = 0.22 0.22 × 3.77% × (1 – 21.00%) = 0.66%
Operating lease liability4 3,935 3,935 ÷ 67,923 = 0.06 0.06 × 4.51% × (1 – 21.00%) = 0.21%
Total: 67,923 1.00 12.14%

Based on: 10-K (reporting date: 2025-02-01).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and other borrowings, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 76,950 76,950 ÷ 96,038 = 0.80 0.80 × 15.67% = 12.55%
Long-term debt and other borrowings, including current portion3 15,480 15,480 ÷ 96,038 = 0.16 0.16 × 3.85% × (1 – 21.00%) = 0.49%
Operating lease liability4 3,608 3,608 ÷ 96,038 = 0.04 0.04 × 4.22% × (1 – 21.00%) = 0.13%
Total: 96,038 1.00 13.17%

Based on: 10-K (reporting date: 2024-02-03).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and other borrowings, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 75,274 75,274 ÷ 93,968 = 0.80 0.80 × 15.67% = 12.55%
Long-term debt and other borrowings, including current portion3 15,760 15,760 ÷ 93,968 = 0.17 0.17 × 3.84% × (1 – 21.00%) = 0.51%
Operating lease liability4 2,934 2,934 ÷ 93,968 = 0.03 0.03 × 3.52% × (1 – 21.00%) = 0.09%
Total: 93,968 1.00 13.15%

Based on: 10-K (reporting date: 2023-01-28).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and other borrowings, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 99,882 99,882 ÷ 117,512 = 0.85 0.85 × 15.67% = 13.32%
Long-term debt and other borrowings, including current portion3 14,883 14,883 ÷ 117,512 = 0.13 0.13 × 3.50% × (1 – 21.00%) = 0.35%
Operating lease liability4 2,747 2,747 ÷ 117,512 = 0.02 0.02 × 3.28% × (1 – 21.00%) = 0.06%
Total: 117,512 1.00 13.73%

Based on: 10-K (reporting date: 2022-01-29).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and other borrowings, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 89,043 89,043 ÷ 106,113 = 0.84 0.84 × 15.67% = 13.15%
Long-term debt and other borrowings, including current portion3 14,641 14,641 ÷ 106,113 = 0.14 0.14 × 3.70% × (1 – 21.00%) = 0.40%
Operating lease liability4 2,429 2,429 ÷ 106,113 = 0.02 0.02 × 3.54% × (1 – 21.00%) = 0.06%
Total: 106,113 1.00 13.61%

Based on: 10-K (reporting date: 2021-01-30).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and other borrowings, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 52,892 52,892 ÷ 68,601 = 0.77 0.77 × 15.67% = 12.08%
Long-term debt and other borrowings, including current portion3 13,234 13,234 ÷ 68,601 = 0.19 0.19 × 4.12% × (1 – 21.00%) = 0.63%
Operating lease liability4 2,475 2,475 ÷ 68,601 = 0.04 0.04 × 3.71% × (1 – 21.00%) = 0.11%
Total: 68,601 1.00 12.81%

Based on: 10-K (reporting date: 2020-02-01).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and other borrowings, including current portion. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Target Corp., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Feb 1, 2025 Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020
Selected Financial Data (US$ in millions)
Economic profit1 (8) 435 (152) 3,733 872 404
Invested capital2 36,107 34,307 30,226 30,151 30,495 27,256
Performance Ratio
Economic spread ratio3 -0.02% 1.27% -0.50% 12.38% 2.86% 1.48%
Benchmarks
Economic Spread Ratio, Competitors4
Costco Wholesale Corp. 8.71% 3.87% 7.93% 6.32% 2.53%
Walmart Inc. 3.89% 2.37% -0.08% 0.46% 1.88% 1.98%

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 Economic profit. See details »

2 Invested capital. See details »

3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -8 ÷ 36,107 = -0.02%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Target Corp. economic spread ratio improved from 2023 to 2024 but then slightly deteriorated from 2024 to 2025 not reaching 2023 level.

Economic Profit Margin

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

Microsoft Excel
Feb 1, 2025 Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020
Selected Financial Data (US$ in millions)
Economic profit1 (8) 435 (152) 3,733 872 404
Net sales 106,566 107,412 109,120 106,005 93,561 78,112
Performance Ratio
Economic profit margin2 -0.01% 0.41% -0.14% 3.52% 0.93% 0.52%
Benchmarks
Economic Profit Margin, Competitors3
Costco Wholesale Corp. 1.15% 0.57% 1.13% 0.94% 0.45%
Walmart Inc. 0.93% 0.57% -0.02% 0.13% 0.56% 0.64%

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 Economic profit. See details »

2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × -8 ÷ 106,566 = -0.01%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Target Corp. economic profit margin improved from 2023 to 2024 but then slightly deteriorated from 2024 to 2025 not reaching 2023 level.