Target is one of the largest five retailers with about 1978 stores in US.
But its stock has been down sine 52-week high point. It is trading at $93.01 per share, with a P/E of around 10.
The larger retailer saw net sales rise to $106.57 billion in fiscal 2024, down 0.79% year-over-year.
Net earnings came in at $4.09 billion or $8.89 per share for the full fiscal 2024, compared with $4.14 billion in the same period last year.
Currently, it’s market capitalization is only about $42 billion – is it a good opportunity to get in?
Stable Profitability
Net sales reached $106.57 billion and net earnings were $4.09 billion for fiscal 2024. Net margin clocked in about 3.8%, as the same to fiscal 2023.
Its net margin is slightly higher than about 3% in Walmart, its peer.
Solid Financial Position
Target’s total assets totaled around $57.77 billion, while total liabilities amounted to $43.1 billion in fiscal 2024. The debt ratio was 74.6%.
The debt level is acceptable, but its borrowing capacity may be reaching a limit.
Long-time debt and other borrows was some $14.3 billion, while its free cash flow clocked in about $4.48 billion.
The ratio of long-time debt to FCF is around 3.2，which is not high，but Target may need a large number of cash to expend its stores from FCF.
Shareholder Yield
Dividend paid was about $2 billion, as stock buyback was some $1 billion. The combination of both lead to a 7% shareholder yield, which is better than BIL, a 4.68% yield.
Though shareholder yield may be down with capital expenditures soaring, I believe that its shareholders yield is still outperforming a 5% yield.
Target, not Walmart
Target is a good company, is n’ t Walmart?
Current, Target stock price is worth to buy in, however Walmart stock is too expensive, trading at about 40 times earnings.
Risk, Opportunity
I think that stock market is still elevated. Few stocks are undervalued or in reasonable range. Target stock is one of few stocks. Most stocks keep a deep risk, like Walmart and Target has a low multiple with stable profitability.
In short-time, it may be affected by Trump’s tariff war with china, but Target always benefits from long-time economic improvement.
More Capital Expenditures Heading Into 2025
“Capital expenditures in 2024 reflect investments in our strategic initiatives, including investments in both stores and in our supply chain enhancing our capabilities and guest experience across stores and digital channel. The decrease in capital expenditures in 2024 compared with 2023 primarily reflects a slowdown in store remodel activities. ”
“We expect capital expenditures in 2025 of approximately $4-5 billion , with the majority focused on store assets , including both new stores and remodels, as well as continued investment in supply chain and technology projects. We expect to open about 20 new stores during 2025 and to resume a faster pace of remodel activities compared with 2024. ” Target said in 2024 form 10k.
Q1 of 2025 Earnings Results
Target posted its earning results for Q1 of 2025 on May 12,2025.
Net sales were $23.8 billion, slightly down around 2.9% year-over-year.
It reported first quarter GAAP earnings per share of $2.27 and Adjusted earnings per share of $1.30 per share.
Net earnings were about $1.04 billion for Q1 of 2025.
Guidance
Target expect a low-single digit decline in sales, and GAAP EPS of $8.00 to $10.00. Adjusted EPS， which excludes the gain from the litigation settlements in the first quarter, is expected to be approximately $7.00 to $9.00.
Valuation
Analysts that cover Target give a average price target of $105.06 per share, which would be a about 11.5% gains over current stock price.
I agree analyst‘s view. Further, I think that Target would be a 50% gains without five years. It may be a opportunity for long-time investors.
