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Should Value Investors Buy Target (TGT) Stock?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Target (TGT - Free Report) . TGT is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 15.81, while its industry has an average P/E of 19.78. Over the last 12 months, TGT's Forward P/E has been as high as 16.96 and as low as 12.34, with a median of 14.26.

We should also highlight that TGT has a P/B ratio of 4.12. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 7.09. Over the past year, TGT's P/B has been as high as 4.21 and as low as 2.64, with a median of 3.40.

Finally, investors will want to recognize that TGT has a P/CF ratio of 8.34. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. TGT's current P/CF looks attractive when compared to its industry's average P/CF of 15.15. Over the past year, TGT's P/CF has been as high as 8.54 and as low as 5.89, with a median of 7.35.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Target is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TGT feels like a great value stock at the moment.




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