TARGET CORP (TGT) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:TGT - US87612E1064 - Common Stock
108.1 USD
+1.6 (+1.5%)
107.8 USD
-0.3 (-0.28%)
We assign a fundamental rating of 5 out of 10 to TGT. TGT was compared to 38 industry peers in the Consumer Staples Distribution & Retail industry. While TGT belongs to the best of the industry regarding profitability, there are concerns on its financial health. TGT has a valuation in line with the averages, but it does not seem to be growing. TGT also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- TGT had positive earnings in the past year.
- TGT had a positive operating cash flow in the past year.
- Each year in the past 5 years TGT has been profitable.
- In the past 5 years TGT always reported a positive cash flow from operatings.
1.2 Ratios
- TGT has a Return On Assets of 6.27%. This is in the better half of the industry: TGT outperforms 68.42% of its industry peers.
- TGT has a better Return On Equity (24.28%) than 76.32% of its industry peers.
- TGT's Return On Invested Capital of 12.98% is amongst the best of the industry. TGT outperforms 89.47% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for TGT is significantly below the industry average of 28.30%.
- The last Return On Invested Capital (12.98%) for TGT is above the 3 year average (11.15%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.27% | ||
| ROE | 24.28% | ||
| ROIC | 12.98% |
ROA(3y)6.59%
ROA(5y)8.24%
ROE(3y)27.82%
ROE(5y)33.57%
ROIC(3y)11.15%
ROIC(5y)14.5%
1.3 Margins
- Looking at the Profit Margin, with a value of 3.58%, TGT belongs to the top of the industry, outperforming 84.21% of the companies in the same industry.
- TGT's Profit Margin has declined in the last couple of years.
- With an excellent Operating Margin value of 6.13%, TGT belongs to the best of the industry, outperforming 86.84% of the companies in the same industry.
- In the last couple of years the Operating Margin of TGT has declined.
- TGT has a better Gross Margin (27.74%) than 65.79% of its industry peers.
- TGT's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 6.13% | ||
| PM (TTM) | 3.58% | ||
| GM | 27.74% |
OM growth 3Y-14.71%
OM growth 5Y-2.48%
PM growth 3Y-16.32%
PM growth 5Y-1.78%
GM growth 3Y-1.24%
GM growth 5Y-1.06%
2. Health
2.1 Basic Checks
- The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so TGT is still creating some value.
- The number of shares outstanding for TGT has been reduced compared to 1 year ago.
- The number of shares outstanding for TGT has been reduced compared to 5 years ago.
- TGT has a better debt/assets ratio than last year.
2.2 Solvency
- TGT has an Altman-Z score of 2.95. This is not the best score and indicates that TGT is in the grey zone with still only limited risk for bankruptcy at the moment.
- The Altman-Z score of TGT (2.95) is worse than 63.16% of its industry peers.
- The Debt to FCF ratio of TGT is 5.48, which is a neutral value as it means it would take TGT, 5.48 years of fcf income to pay off all of its debts.
- Looking at the Debt to FCF ratio, with a value of 5.48, TGT is in line with its industry, outperforming 52.63% of the companies in the same industry.
- TGT has a Debt/Equity ratio of 0.99. This is a neutral value indicating TGT is somewhat dependend on debt financing.
- TGT has a worse Debt to Equity ratio (0.99) than 65.79% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.99 | ||
| Debt/FCF | 5.48 | ||
| Altman-Z | 2.95 |
ROIC/WACC1.74
WACC7.45%
2.3 Liquidity
- A Current Ratio of 0.97 indicates that TGT may have some problems paying its short term obligations.
- TGT's Current ratio of 0.97 is on the low side compared to the rest of the industry. TGT is outperformed by 71.05% of its industry peers.
- A Quick Ratio of 0.27 indicates that TGT may have some problems paying its short term obligations.
- TGT has a worse Quick ratio (0.27) than 76.32% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.97 | ||
| Quick Ratio | 0.27 |
3. Growth
3.1 Past
- The earnings per share for TGT have decreased strongly by -20.04% in the last year.
- The Earnings Per Share has been growing slightly by 6.72% on average over the past years.
- The Revenue has decreased by -2.16% in the past year.
- The Revenue has been growing slightly by 6.41% on average over the past years.
EPS 1Y (TTM)-20.04%
EPS 3Y-13.2%
EPS 5Y6.72%
EPS Q2Q%-3.78%
Revenue 1Y (TTM)-2.16%
Revenue growth 3Y0.18%
Revenue growth 5Y6.41%
Sales Q2Q%-1.55%
3.2 Future
- Based on estimates for the next years, TGT will show a small growth in Earnings Per Share. The EPS will grow by 2.64% on average per year.
- The Revenue is expected to grow by 1.93% on average over the next years.
EPS Next Y-16.75%
EPS Next 2Y-5.93%
EPS Next 3Y-1.77%
EPS Next 5Y2.64%
Revenue Next Year-1.49%
Revenue Next 2Y0.15%
Revenue Next 3Y1.01%
Revenue Next 5Y1.93%
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 14.34, the valuation of TGT can be described as correct.
- Compared to the rest of the industry, the Price/Earnings ratio of TGT indicates a somewhat cheap valuation: TGT is cheaper than 73.68% of the companies listed in the same industry.
- The average S&P500 Price/Earnings ratio is at 27.21. TGT is valued slightly cheaper when compared to this.
- Based on the Price/Forward Earnings ratio of 13.79, the valuation of TGT can be described as correct.
- TGT's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. TGT is cheaper than 73.68% of the companies in the same industry.
- TGT's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 24.26.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.34 | ||
| Fwd PE | 13.79 |
4.2 Price Multiples
- Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of TGT indicates a rather cheap valuation: TGT is cheaper than 81.58% of the companies listed in the same industry.
- Compared to the rest of the industry, the Price/Free Cash Flow ratio of TGT indicates a somewhat cheap valuation: TGT is cheaper than 71.05% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.27 | ||
| EV/EBITDA | 6.38 |
4.3 Compensation for Growth
- TGT has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)2.13
EPS Next 2Y-5.93%
EPS Next 3Y-1.77%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 4.10%, TGT is a good candidate for dividend investing.
- Compared to an average industry Dividend Yield of 0.72, TGT pays a better dividend. On top of this TGT pays more dividend than 100.00% of the companies listed in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.82, TGT pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.1% |
5.2 History
- The dividend of TGT is nicely growing with an annual growth rate of 11.38%!
- TGT has paid a dividend for at least 10 years, which is a reliable track record.
- The dividend of TGT decreased recently.
Dividend Growth(5Y)11.38%
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
- TGT pays out 54.48% of its income as dividend. This is a bit on the high side, but may be sustainable.
- The dividend of TGT is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP54.48%
EPS Next 2Y-5.93%
EPS Next 3Y-1.77%
TARGET CORP / TGT FAQ
What is the ChartMill fundamental rating of TARGET CORP (TGT) stock?
ChartMill assigns a fundamental rating of 5 / 10 to TGT.
What is the valuation status for TGT stock?
ChartMill assigns a valuation rating of 5 / 10 to TARGET CORP (TGT). This can be considered as Fairly Valued.
How profitable is TARGET CORP (TGT) stock?
TARGET CORP (TGT) has a profitability rating of 7 / 10.
What is the earnings growth outlook for TARGET CORP?
The Earnings per Share (EPS) of TARGET CORP (TGT) is expected to decline by -16.75% in the next year.
Can you provide the dividend sustainability for TGT stock?
The dividend rating of TARGET CORP (TGT) is 7 / 10 and the dividend payout ratio is 54.48%.