Now trading at a price of $114.78, Target has moved -2.2% so far today.
Target returned losses of -24.0% last year, with its stock price reaching a high of $181.7 and a low of $114.16. Over the same period, the stock underperformed the S&P 500 index by -43.0%. As of April 2023, the company's 50-day average price was $128.16. Target Corporation operates as a general merchandise retailer in the United States. Based in Minneapolis, MN, the large-cap Consumer Discretionary company has 440,000 full time employees. Target has offered a 3.7% dividend yield over the last 12 months.
EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding:
| 2018-03-14 | 2019-03-13 | 2020-03-11 | 2021-03-10 | 2022-03-09 | 2023-03-08 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $72,714 | $75,356 | $78,112 | $93,561 | $106,005 | $109,120 |
| Gross Margins | 30.0% | 28.0% | 30.0% | 28.0% | 28.0% | 25.0% |
| Operating Margins | 6% | 5% | 6% | 7% | 8% | 4% |
| Net Margins | 4.0% | 4.0% | 4.0% | 5.0% | 7.0% | 3.0% |
| Net Income (MM) | $2,914 | $2,937 | $3,281 | $4,368 | $6,946 | $2,780 |
| Net Interest Expense (MM) | -$653 | -$461 | -$477 | -$977 | -$421 | -$478 |
| Depreciation & Amort. (MM) | -$2,476 | -$2,474 | -$2,604 | -$2,485 | -$2,642 | -$2,700 |
| Earnings Per Share | $5.3 | $5.51 | $6.36 | $8.64 | $14.87 | $5.98 |
| EPS Growth | n/a | 3.96% | 15.43% | 35.85% | 72.11% | -59.78% |
| Diluted Shares (MM) | 550 | 533 | 516 | 505 | 467 | 465 |
| Free Cash Flow (MM) | $9,437 | $9,404 | $10,081 | $13,132 | $12,142 | $9,538 |
| Capital Expenditures (MM) | -$2,502 | -$3,431 | -$2,964 | -$2,607 | -$3,517 | -$5,520 |
| Net Current Assets (MM) | -$16,112 | -$17,474 | -$18,044 | -$16,052 | -$19,411 | -$24,257 |
| Long Term Debt (MM) | $11,117 | $10,223 | $11,338 | $11,536 | $13,549 | $16,009 |
| Net Debt / EBITDA | 1.31 | 1.48 | 1.23 | 0.46 | 0.67 | 2.12 |
Target has weak revenue growth and a flat capital expenditure trend, irregular cash flows, and significant leverage. We also note that the company benefits from strong margins with a negative growth trend and wider gross margins than its peer group. However, the firm has EPS growth achieved by reducing the number of outstanding shares.
A Very Low P/E Ratio but Trades Above Its Graham Number:
Target has a trailing twelve month P/E ratio of 17.6, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of $9.0, the company has a forward P/E ratio of 14.2. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 5.5%. On this basis, the company's PEG ratio is 3.22, which suggests that it is overpriced. Furthermore, Target is likely overvalued compared to the book value of its equity, since its P/B ratio of 4.42 is higher than the sector average of 3.12. The company's shares are currently trading 101.3% above their Graham number.
Target Has an Average Rating of Buy:
The 29 analysts following Target have set target prices ranging from $130.0 to $184.0 per share, for an average of $151.17 with a buy rating. As of April 2023, the company is trading -15.2% away from its average target price, indicating that there is an analyst consensus of strong upside potential.
Target has a very low short interest because 1.9% of the company's shares are sold short. Institutions own 81.5% of the company's shares, and the insider ownership rate stands at 0.2%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $5,030,468,970.
