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1. Company Snapshot

1.a. Company Description

Target Corporation operates as a general merchandise retailer in the United States.The company offers food assortments, including perishables, dry grocery, dairy, and frozen items; apparel, accessories, home décor products, electronics, toys, seasonal offerings, food, and other merchandise; and beauty and household essentials.It also provides in-store amenities, such as Target Café, Target Optical, Starbucks, and other food service offerings.


The company sells its products through its stores; and digital channels, including Target.com.As of March 09, 2022, the company operated approximately 2,000 stores.Target Corporation was incorporated in 1902 and is headquartered in Minneapolis, Minnesota.

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1.b. Last Insights on TGT

Target Corporation faces challenges, including soft demand, shrinking margins, and declining sales. The company's Q3 results showed a 1.5% decrease in net sales and a 2.7% decline in comparable sales. Despite this, digital comparable sales growth offers hope for improvement. Target is investing in store remodels, technology, and strategic initiatives to drive long-term growth. The company has identified its problems and is taking action to address them. A "Buy" rating from some analysts suggests potential upside.

1.c. Company Highlights

2. Target's Q3 Earnings: A Mixed Bag with Strategic Investments

Target Corporation reported a net sales decline of 1.5% year-over-year in Q3, with comparable sales down 2.7%. The gross margin rate was 28.2%, down 10 basis points from last year, primarily due to higher markdowns and lower inventory shrink. Adjusted EPS was $1.78, beating analyst estimates of $1.71, and representing a 4% decline from the previous year. The company's digital comparable sales grew 2.4%, driven by a 35% growth in same-day delivery.

Publication Date: Nov -20

📋 Highlights
  • 11-Year Growth Milestone:: Top-line growth over $30 billion higher than 2014, with adjusted EPS nearly doubled.
  • Capital Expenditure Increase:: $5 billion allocated for next fiscal year to fund store openings, remodels, and tech upgrades.
  • Q3 Sales Performance:: Comparable sales down 2.7%, offset by 2.4% digital growth driven by 35% same-day delivery rise.
  • Restructuring Efforts:: 1,800 headquarters roles eliminated (8% reduction) to streamline operations and boost agility.
  • EPS and Guidance:: Adjusted EPS at $1.78 (-4% YoY), with full-year EPS forecast narrowed to $7–$8 despite Q4 expected single-digit comp decline.

Operational Highlights

The company has made significant progress in its strategic priorities, including solidifying design-led merchandising authority, elevating the shopping experience, and leveraging technology to improve speed and efficiency. Notable achievements include the rollout of AI-powered tools to enhance merchandising and the success of its FUN 101 category. The company is also investing heavily in new store openings, remodels, and technology to drive growth.

Capital Expenditures and Investments

Target expects to increase its capital expenditures to $5 billion in the next fiscal year, focusing on areas that drive growth and strong returns, such as new store openings, remodels, and technology. The company has invested $2.8 billion in capital expenditures so far this year and plans to deploy excess cash to repurchase shares over time. This investment is expected to drive growth and improvement in results, with a focus on delivering an elevated shopping experience and building a stronger, faster, and more innovative Target.

Valuation and Outlook

With a P/E Ratio of 9.67 and a Dividend Yield of 5.25%, Target's valuation appears reasonable. The company's ROE of 26.73% and ROIC of 9.89% indicate strong profitability. Analysts estimate next year's revenue growth at -1.2%, but the company's strategic investments and focus on growth areas may help drive a return to sustainable, profitable growth. The company's guidance for a low single-digit decline in Q4 reflects the volatility in Q3, but Target remains focused on making progress and getting back to growth.

3. NewsRoom

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Target Says Shifting Order Fulfillment to Slower Stores Speeds Delivery and Reduces Costs

Dec -04

Source: pymnts.com

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Market Today: WBD Sale Bids, Meta Cuts, Apple Shake-Up

Dec -04

Source: gurufocus.com

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Crude Oil Price Forecast: Weekly Reversal + Channel Break Sets $63–$64 Target

Dec -04

Source: fxempire.com

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Emerging Growth Research Issues Flash Report on OSR Holdings, Inc., Reaffirms Buy-Emerging Rating and $10.00 Price Target Following Major Licensing Agreement

Dec -04

Source: newsfilecorp.com

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Philips CEO Warns About 2026 Growth Target, Stock Drops

Dec -04

Source: benzinga.com

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Target Tests New Models for Next-Day Delivery

Dec -04

Source: wsj.com

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The Highest-Yielding Dividend Aristocrats Deliver 5%-6% Yields and Safety

Dec -04

Source: 247wallst.com

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First Look: Insurers, Auto Rules, AI and Fed Jitters

Dec -04

Source: gurufocus.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (0.70%)

6. Segments

U.S. Retail Operations

Expected Growth: 0.7%

The expected growth rate of 0.7% for U.S. Retail Operations is based on the assumption that the segment will experience modest growth, driven by increased foot traffic and sales in existing stores, as well as the introduction of new products and services. This growth rate reflects a stable and mature market with opportunities for incremental improvement.

7. Detailed Products

Clothing

Target Corporation offers a wide range of clothing for men, women, and children, including casual wear, formal wear, and activewear.

Home Goods

Target Corporation sells a variety of home goods, including furniture, bedding, kitchenware, and decorative items.

Electronics

Target Corporation offers a range of electronics, including TVs, laptops, tablets, smartphones, and gaming consoles.

Toys and Games

Target Corporation sells a variety of toys and games for children, including action figures, dolls, puzzles, and board games.

Health and Beauty

Target Corporation offers a range of health and beauty products, including skincare, haircare, cosmetics, and fragrances.

Food and Beverages

Target Corporation sells a variety of food and beverages, including snacks, beverages, and prepared meals.

Pharmacy and Health Services

Target Corporation offers pharmacy services, including prescription filling, immunizations, and health clinics.

Baby and Kids' Products

Target Corporation sells a range of baby and kids' products, including strollers, car seats, toys, and nursery furniture.

Sports and Outdoors

Target Corporation offers a variety of sports and outdoor gear, including bicycles, camping equipment, and athletic gear.

Pet Supplies

Target Corporation sells a range of pet supplies, including food, toys, and grooming products.

8. Target Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Target Corporation operates in the retail industry, where substitutes are readily available. However, the company's strong brand recognition and loyalty programs help to mitigate the threat of substitutes.

Bargaining Power Of Customers

Target Corporation's customers have a high bargaining power due to the availability of substitutes and the ease of switching to competitors. The company's pricing strategy and loyalty programs help to mitigate this threat.

Bargaining Power Of Suppliers

Target Corporation has a diverse supplier base, which reduces the bargaining power of individual suppliers. The company's large scale of operations also gives it negotiating power over its suppliers.

Threat Of New Entrants

The retail industry has high barriers to entry, including significant capital requirements and the need for a large scale of operations. This makes it difficult for new entrants to compete with established players like Target Corporation.

Intensity Of Rivalry

The retail industry is highly competitive, with many established players competing for market share. Target Corporation faces intense rivalry from competitors like Walmart, Costco, and Amazon, which puts pressure on its pricing and profitability.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 54.48%
Debt Cost 3.95%
Equity Weight 45.52%
Equity Cost 9.74%
WACC 6.58%
Leverage 119.66%

11. Quality Control: Target Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Altria

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Value: 6.8

Growth: 5.8

Quality: 7.5

Yield: 10.0

Momentum: 8.5

Volatility: 9.7

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Walmart

A-Score: 5.5/10

Value: 2.4

Growth: 5.4

Quality: 4.8

Yield: 2.0

Momentum: 8.5

Volatility: 9.7

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Dollar General

A-Score: 5.4/10

Value: 5.2

Growth: 5.6

Quality: 3.9

Yield: 3.0

Momentum: 9.0

Volatility: 5.7

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Costco Wholesale

A-Score: 5.4/10

Value: 1.4

Growth: 7.0

Quality: 5.7

Yield: 2.0

Momentum: 6.0

Volatility: 10.0

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Target

A-Score: 5.0/10

Value: 6.8

Growth: 5.1

Quality: 4.7

Yield: 7.0

Momentum: 0.5

Volatility: 6.0

1-Year Total Return ->

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Dollar Tree

A-Score: 4.2/10

Value: 5.5

Growth: 3.2

Quality: 2.8

Yield: 0.0

Momentum: 8.5

Volatility: 5.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

91.59$

Current Price

91.59$

Potential

-0.00%

Expected Cash-Flows