Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Target Corp., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 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).
The financial performance, as indicated by cash provided by operating activities and free cash flow to the firm (FCFF), demonstrates considerable fluctuation over the observed period. Initial values show a substantial decrease followed by a recovery, and then a leveling off. A detailed examination reveals specific trends and patterns.
- Cash provided by operating activities
- Cash provided by operating activities began at US$10,525 million in January 2021, then decreased to US$8,625 million in January 2022. A significant decline occurred in January 2023, falling to US$4,018 million. A recovery was observed in February 2024, reaching US$8,621 million, followed by a slight decrease to US$7,367 million in February 2025, and a further decrease to US$6,562 million in January 2026. This suggests operational cash generation is volatile, with a recent trend towards lower values.
- Free Cash Flow to the Firm (FCFF)
- FCFF followed a similar pattern of initial decline and subsequent recovery, but with more pronounced swings. Starting at US$8,188 million in January 2021, it decreased to US$5,116 million in January 2022. A substantial negative value of US$-1,369 million was recorded in January 2023. FCFF then rebounded significantly to US$4,184 million in February 2024, continuing to US$4,635 million in February 2025, and decreasing to US$3,220 million in January 2026. The negative FCFF in 2023 is a key point of concern, indicating the company did not generate enough cash from operations to cover its investments and financing costs.
- Relationship between Operating Cash Flow and FCFF
- While both metrics generally move in the same direction, the magnitude of the fluctuations in FCFF is greater than that of cash provided by operating activities. This suggests that factors beyond core operations, such as capital expenditures or changes in working capital, significantly impact FCFF. The substantial difference between the two metrics in 2023, with positive operating cash flow and negative FCFF, highlights the importance of these non-operational factors.
- Recent Trends
- The most recent two years (February 2024 and January 2026) show a leveling off of both metrics, although at lower levels than the initial period. Operating cash flow decreased from US$8,621 million to US$6,562 million, and FCFF decreased from US$4,184 million to US$3,220 million. This suggests a potential stabilization, but at a reduced level of cash generation.
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Interest Paid, Net of Tax
Target Corp., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 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).
2 2026 Calculation
Interest paid, net of capitalized interest, tax = Interest paid, net of capitalized interest × EITR
= 629 × 22.30% = 140
The analysis reveals a fluctuating pattern in interest expense, net of tax, alongside a relatively stable effective income tax rate over the observed period. Interest expense decreased significantly in 2022 before exhibiting a consistent upward trend in subsequent years. The effective income tax rate experienced some volatility but remained within a narrow range.
- Interest Paid, Net of Tax
- Interest paid, net of tax, began at US$740 million in 2021. A substantial decrease was observed in 2022, falling to US$323 million. From 2022 through 2026, the figure demonstrates a clear increasing trend. It rose to US$365 million in 2023, then to US$473 million in 2024, US$478 million in 2025, and finally reached US$489 million in 2026. The rate of increase appears to be moderating in the later years of the period.
- Effective Income Tax Rate
- The effective income tax rate showed moderate fluctuations. It was 21.20% in 2021, increased to 22.00% in 2022, then decreased to 18.70% in 2023. The rate then rose to 21.90% in 2024, 22.20% in 2025, and 22.30% in 2026. The rate generally stabilized between 21.90% and 22.30% from 2024 onwards.
The decrease in interest expense in 2022, followed by the subsequent increase, warrants further investigation to understand the underlying drivers. Potential factors could include changes in debt levels, interest rate fluctuations, or debt refinancing activities. The relatively stable effective income tax rate suggests consistent tax planning or a lack of significant changes in applicable tax laws during the period.
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Enterprise Value to FCFF Ratio, Current
Target Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 71,830) |
| Free cash flow to the firm (FCFF) | 3,220) |
| Valuation Ratio | |
| EV/FCFF | 22.31 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Costco Wholesale Corp. | 50.62 |
| Walmart Inc. | 55.54 |
| EV/FCFF, Sector | |
| Consumer Staples Distribution & Retail | 51.24 |
| EV/FCFF, Industry | |
| Consumer Staples | 37.93 |
Based on: 10-K (reporting date: 2026-01-31).
1 Click competitor name to see calculations.
If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.
Enterprise Value to FCFF Ratio, Historical
Target Corp., historical EV/FCFF calculation, comparison to benchmarks
| Jan 31, 2026 | Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Enterprise value (EV)1 | 64,758) | 60,052) | 89,183) | 89,184) | 107,691) | 93,212) | |
| Free cash flow to the firm (FCFF)2 | 3,220) | 4,635) | 4,184) | (1,369) | 5,116) | 8,188) | |
| Valuation Ratio | |||||||
| EV/FCFF3 | 20.11 | 12.95 | 21.32 | — | 21.05 | 11.38 | |
| Benchmarks | |||||||
| EV/FCFF, Competitors4 | |||||||
| Costco Wholesale Corp. | — | 50.20 | 59.32 | 35.54 | 58.09 | 35.64 | |
| Walmart Inc. | 61.59 | 47.89 | 30.87 | 30.99 | 33.26 | 14.86 | |
| EV/FCFF, Sector | |||||||
| Consumer Staples Distribution & Retail | — | 42.73 | 36.25 | 39.50 | 34.48 | 16.94 | |
| EV/FCFF, Industry | |||||||
| Consumer Staples | — | 35.39 | 31.10 | 30.22 | 30.06 | 20.91 | |
Based on: 10-K (reporting date: 2026-01-31), 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).
3 2026 Calculation
EV/FCFF = EV ÷ FCFF
= 64,758 ÷ 3,220 = 20.11
4 Click competitor name to see calculations.
The Enterprise Value to Free Cash Flow to the Firm (EV/FCFF) ratio exhibits considerable fluctuation over the observed period. Initial values indicate a relatively high valuation compared to generated cash flow, followed by periods of significant change and eventual stabilization.
- Enterprise Value (EV)
- Enterprise Value decreased from US$107,691 million in 2022 to US$89,184 million in 2023, remaining relatively stable at US$89,183 million in 2024. A subsequent decline to US$60,052 million is noted in 2025, with a partial recovery to US$64,758 million in 2026. This suggests potential shifts in market perception of the firm’s overall value, or changes in capital structure.
- Free Cash Flow to the Firm (FCFF)
- Free Cash Flow to the Firm experienced a substantial decrease from US$8,188 million in 2021 to US$5,116 million in 2022. A significant negative value of US$-1,369 million was recorded in 2023, indicating cash outflows exceeding cash inflows from operations. FCFF then rebounded to US$4,184 million in 2024 and continued to increase to US$4,635 million in 2025, before decreasing slightly to US$3,220 million in 2026. These fluctuations suggest volatility in the firm’s operational cash generation.
- EV/FCFF Ratio
- The EV/FCFF ratio began at 11.38 in 2021 and increased substantially to 21.05 in 2022, reflecting a higher valuation relative to cash flow. The ratio was not calculated for 2023 due to the negative FCFF value. In 2024, the ratio was 21.32, remaining elevated. A decrease to 12.95 is observed in 2025, coinciding with the decline in EV and increase in FCFF. The ratio then increased again to 20.11 in 2026. The overall trend suggests that the market valuation, relative to the firm’s free cash flow, is sensitive to changes in both EV and FCFF, with the 2023 negative FCFF creating a discontinuity in the trend.
The observed volatility in both EV and FCFF, and consequently the EV/FCFF ratio, warrants further investigation into the underlying drivers of these changes. The negative FCFF in 2023 is a particularly noteworthy event that requires detailed analysis.
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