Target Corp (TGT) stock analysis

P/E above its 5-year median

Target's P/E of 16.8 is above its own 5-year median of 16.0.

P/E below the industry

Target's P/E of 16.8 is below the Variety Stores median of 22.1.

EV/EBITDA below its 5-year median

Target's EV/EBITDA of 9.3 is below its 5-year median of 9.5.

P/B below the industry

Target's price-to-book of 4.11 is below the Variety Stores median of 5.48.

Trading below fair value

The share price of $161.45 is below our fair value estimate of $175.09.

Margin of safety under 20%

The price is 7.8% below fair value, less than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew -1.3% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 10.8% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 11.8% over the last twelve months, against a 5-year average of -3.2% a year.

Growing slower than the industry

Revenue grew 2.0% over the last twelve months; the Variety Stores median is 9.6%.

Guidance raised

Target raised its Full-year net sales growth outlook on Aug 19, 2026.

Gross margin improving

Gross margin was 29.3% over the last twelve months, against 27.8% a year earlier.

Return on equity over 15%

Return on equity was 26.4% over the last twelve months and averaged 32.2% over five years.

Return on capital over 10%

Return on invested capital was 16.9%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Target's return on equity of 26.4% is above the Variety Stores median of 24.9%.

Earnings shrank over 5 years

Net income shrank 3.2% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 4.1% over the last twelve months, against a 5-year average of 4.1%.

Net margin above the industry

Target's net margin of 4.1% is above the Variety Stores median of 4.0%.

High debt

Debt is 86.1% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 87.8% five years ago to 86.1%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 56.8% of total debt.

Interest well covered

Operating income covers interest expense 14.0 times.

Short-term assets don't cover short-term debts

Current assets are 0.99 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 3.34; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Target paid dividends worth 2.1% of the share price over the last twelve months.

Yield below Treasuries

The 2.1% yield is below the 4.7% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Target yields 2.1%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 47.1% of net income.

Covered by free cash flow

Dividends take 46.4% of free cash flow.