Along with most other retailers, Target's (TGT -0.61%) faced tough times over the past year. Higher inflation and general economic woes have increased the company's costs -- and weighed on its customers' buying power.

We saw the results of this in the annual earnings report. Target announced a 60% drop in net earnings and a narrowing of gross margin.

And the economic environment continues to be difficult, meaning recovery will take time. Still, the worst may be over for this retail giant. In fact, 12 words from chief financial officer Michael Fiddelke make the stock a screaming buy right now.

A look back at 2022

Before we get to the CFO's comment, though, here's a quick catch-up on what happened in 2022. For the first time in years, Target became a net user of cash.

The reasons? Rising inflation drove project costs higher. Inventory levels grew as customers' buying habits shifted -- and longer lead times for shipping stock added to the inventory problem.

Now here are the words from Fiddelke that signal better days ahead and make Target a buy: "This year, we expect each of those factors to become more favorable."

The company expects profit dollars to increase and the pace of capital spending to decrease. Improvements in shipping lead times and efforts Target made last year to reduce inventory should help the inventory situation this year.

Even with that potential boost, Target still remains cautious for the year as headwinds remain. For example, it expects weak sales to continue in some of the higher-margin discretionary product categories. And as consumers continue to seek the best bargains, Target may have to deliver them. So the company's forecast for annual sales is broad: from a low-single-digit decline to a low-single-digit increase.

But, as Fiddelke's words suggest, things are moving in the right direction for Target. The company expects its operating income margin rate to reach 6% or even higher within the coming three years. That's compared to 3.7% right now.

A 23rd straight quarter of sales gains

Now, let's consider a few other positive points that should help Target reach its goals. In spite of today's difficult environment, fourth-quarter comparable sales still increased -- for a 23rd straight quarter.

And guest traffic drove the gain. In fact, last year, Target grew traffic by 2.1%. The company also made market share gains across all five of its product categories.

All of this is key because it shows customers keep coming back to Target even during difficult times. So we can count on this movement to drive growth once the economic situation improves.

Target also reported that sales within its billion-dollar portfolio of owned brands grew faster than the company's total sales last year. Why is this important? These brands attract shoppers because they offer items that are very reasonably priced -- and these brands are high margin for Target.

Finally, the projects that have represented higher costs in the near term should pay off over time. The company has built out its same-day delivery and pickup services and fulfillment network in recent years. Thanks to that, over the past four years, average fulfillment cost per unit has dropped 40%.

Today, Target shares trade for 19 times forward earnings estimates -- compared with more than 40 a year ago. This makes them a screaming buy, considering the company's situation today.

The worst looks like it's over. Target has made adjustments to get through these difficult economic times. And long-term prospects remain bright. So investors today may benefit in a major way over the long haul.