Target Corporation is a national general-merchandise and digital retailer that produces roughly $107.41B in annual revenue and combines substantial shareholder returns (most recent ROE 22.9%) with recent earnings volatility.
On the positive side, revenue has been relatively stable and its per‑share top‑line has shown multi‑year growth — five‑year revenue‑per‑share CAGR is 7.35% and reported revenue sits near $106–$109B in recent annual reads (Revenue & Net Income).
The company carries conservative net leverage with debt‑to‑equity of 0.87 and comfortable interest coverage of 10.7x, supporting debt service capacity, while reported net income has exhibited consistency on a risk‑adjusted basis (net‑income avg/stdev = 4.22) (Return on Equity (ROE), Strategic Capital Allocation).
Trailing P/E sits at 14.6x most recently (14.5656 underlying), a material move from mid‑year lows but below some historical peaks (Price-to-Earnings (PE) Ratio Trend).
Areas of concern are clear in the income statement and margins. Diluted EPS has contracted recently to $7.52 with year‑over‑year EPS growth of -9.4%, and revenue‑per‑share growth has turned negative at -1.6% in the latest observation (EPS Diluted & Revenue per Share, Revenue & EPS Growth).
Net profit margin has declined to 3.9% from a 2022 peak of 6.6%, indicating pressure on bottom‑line conversion despite stable revenues (Profit Margin Trends).
Liquidity also warrants attention: the current ratio is below 1.0 at 0.9423, which contrasts with the firm’s comfortable interest coverage and could signal short‑term working capital tightness.
The foundation of business quality and long-term value creation
Net income for Target Corp over the most recent quarters shows fluctuation around the mid-to-high hundreds of millions, with the last four reported quarters of $1.04B (2026-01-31), $689.0M (2025-11-01), $935.0M (2025-08-02) and $1.04B (2025-05-03). Notable inflection points are much larger net income readings in the early-year reports of 2024 and 2025 — $2.33B (2024-02-03) and $2.29B (2025-02-01) — which stand well above surrounding quarters. The most recent reported net income is $1.04B for the quarter ended 2026-01-31.
Revenue in the dataset is reported at multi-quarter/annual intervals and has stayed in a narrow band in recent years: $106.00B (period ending 2022-01-29), $109.12B (period ending 2023-01-28) and $107.41B (period ending 2024-02-03). That series shows relative stability around the \$106–\$109B range, with the latest reported revenue of $107.41B. The most recent net income was $1.04B (period ended 2026-01-31). The most recent revenue was $107.41B (period ended 2024-02-03).
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Jan 2023 to Feb 2024, Target Corp generates $107.41B in revenue. After accounting for taxes and expenses, the company retains 3.9% as net profit margin, resulting in $4.14B in net earnings from $107.41B in revenue.
Period Information
Report Type: Annual (10-K)
Period: Jan 2023 to Feb 2024
Analyzing long-term margin stability and competitive positioning
TARGET CORP's most recent net profit margin is 3.9% as of the period ending 2024-02-03, down from 6.6% in the period ending 2022-01-29. Earlier net margin readings in the dataset were 3.8% (period ending 2017-01-28) and 3.9% (period ending 2019-02-02), so the latest net margin has declined from the 2022 peak and sits near the earlier multi-year levels.
Understanding Profit Margins
Between Jan 2023 and Feb 2024, Target Corp converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
TARGET CORP's trailing twelve-month net income shows variability with a recent downward move. Net income rose to $5.12B at the 2025-08-02 period-end, eased to $4.96B at 2025-11-01, and declined further to $3.71B by 2026-01-31. Earlier in the series there was a larger peak of $6.95B at 2022-01-29, indicating that recent quarters have trended lower versus that prior high.
Operating cash flow (TTM) in the dataset is only present for the 2018-02-03 period-end, at $6.92B, so a contemporaneous comparison to the most recent net income figures is not possible from the provided data. The most recent Net Income (TTM) was $3.71B (period end 2026-01-31). The most recent Operating Cash Flow (TTM) data point provided was $6.92B (period end 2018-02-03).
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
TARGET CORP's return on equity has been volatile across the available history, showing periods of very high profitability interspersed with sharp declines. Notable high points include 54.2% (period end 2022-01-29) and 36.7% (period end 2024-05-04), while a pronounced trough occurred at 11.5% (period end 2025-02-01), indicating material quarter-to-quarter swings rather than a steady trend.
Focusing on the most recent quarters, ROE climbed sharply from 11.5% on 2025-02-01 to 33.2% on 2025-08-02, held near 32.0% on 2025-11-01, then declined to 22.9% on 2026-01-31, marking a pullback from the mid-30% range. The most recent Return on Equity (ROE) was 22.9%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
For TARGET CORP, the most recent TTM datapoint available is for financing cash flow: the 2023-01-28 trailing twelve months show net financing outflows of - $2.20B. This represents a notable improvement from larger financing outflows reported in early-to-mid 2022 (for example, - $8.07B at 2022-01-29 and - $8.86B at 2022-04-30), marking an inflection toward smaller net financing cash outflows in the latest period.
The latest available trailing-twelve-month figures for operating and investing cash flow are from earlier reporting periods. Operating cash flow (TTM) most recently recorded is $6.92B (period_end 2018-02-03). Investing cash flow (TTM) most recently recorded is - $3.42B (period_end 2019-02-02).
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
Over the past year TARGET CORP’s trailing twelve-month P/E declined from 16.2x at the 2025-02-01 period to 9.6x (2025-08-02) and 9.1x (2025-11-01), then rebounded to 14.6x in the most recent quarter (2026-01-31).
The mid-2025 drop and the subsequent increase in the latest quarter constitute the clearest inflection in the record, with the most recent data point representing a material uptick versus the prior two quarters.
Historically, the current 14.6x level is below several earlier peaks such as 16.9x (2024-02-03) and 20.7x (2021-01-30) but above mid-2019 readings near 12x and the low 8–9x readings seen in 2011–2012. The most recent P/E ratio was 14.6x as of 2026-01-31.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.