We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Target Off to Solid Start in 2019, Outpaces S&P 500 & Industry
Read MoreHide Full Article
Target Corporation (TGT - Free Report) started this year off on an impressive note, maintaining the momentum so far. Of late, this general merchandise retailer has been one of the most talked about stocks in Wall Street courtesy of strong holiday sales amid ultra-competitive retail environment.
This Minneapolis, MN-based company is off to a solid start rising roughly 9.6% compared with the S&P 500’s and the Zacks Retail-Discount industry’s growth of 6.4% and 6.6%, respectively, so far in the year.
Here’s Why Target Make the Headlines
Target emerged strong during the holiday season joining the bandwagon of retailers — Five Below (FIVE - Free Report) , American Eagle Outfitters (AEO - Free Report) and Ollie's Bargain Outlet Holdings (OLLI - Free Report) — which also witnessed impressive sales.
The company registered a jump of 5.7% in comparable sales during the festive season compared with 3.4% growth recorded in the year-ago period. Markedly, comps grew across all five key merchandise categories, with Toys, Baby and Seasonal Gift products witnessing exceptional growth. Management expects fourth-quarter fiscal 2018 comparable sales to increase approximately 5%.
Retail is no more restricted to brick-&-mortar and the scenario has drastically changed with the advancement of technology and digital transformation which have altered consumer shopping pattern. In fact, Target has taken steps that have improved prospects in a big way. The company’s initiatives such as the development of omni-channel capacities, diversification and localization of assortments along with emphasis on flexible format stores to generate higher sales productivity bode well. These are going to play a major role in 2019.
It has also rolled out Target Restock program that enables customers to restock their shipping box with essential items online and get them delivered at door steps by the next business day for a nominal charge. Further, in order to improve supply chain and expand delivery capabilities, the company had acquired Grand Junction.
Earlier, Target teamed up with popular online grocery delivery service Instacart to capture the booming online grocery delivery market. Further, the company made significant headway in the same-day delivery race by acquiring Internet-based grocery delivery service Shipt to provide same-day delivery of more than 55,000 groceries, essentials, home, electronics, toys and other products.
Drive Up, an app-based service, is another initiative to facilitate the shopping process. The service allows customers to place orders using the Target app and have them delivered to their cars. Notably, Store Pickup plus Drive Up soared more than 60% year over year, and formed nearly 25% of Target’s digital sales during the November-December period.
Valuation Perspective
A brief glance at some valuation metrics seems to indicate that Target has enough room to run in bourses. Further a Value Score of A also indicates the same.
Target with a price to sales ratio of 0.5 compared with that of industry’s 1.2 indicate that the stock has enough upside potential. The stock also looks attractive with respect to a forward price-to-earnings (P/E) multiple of 13.4x versus industry’s 20.3x. A more-or-less similar picture emerges when comparing EV/EBITDA ratios. Target holds the edge here with an EV/EBITDA ratio of 7.7 lower than 14.9 for the industry.
Bottom Line
The prospects of the players in the industry are closely tied to the purchasing power of consumers. A robust job market and higher disposable income are working in favor of industry participants. Further, the strategy to sell products at discounted prices has helped companies in the space to expand their customer base.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
Image: Bigstock
Target Off to Solid Start in 2019, Outpaces S&P 500 & Industry
Target Corporation (TGT - Free Report) started this year off on an impressive note, maintaining the momentum so far. Of late, this general merchandise retailer has been one of the most talked about stocks in Wall Street courtesy of strong holiday sales amid ultra-competitive retail environment.
This Minneapolis, MN-based company is off to a solid start rising roughly 9.6% compared with the S&P 500’s and the Zacks Retail-Discount industry’s growth of 6.4% and 6.6%, respectively, so far in the year.
Here’s Why Target Make the Headlines
Target emerged strong during the holiday season joining the bandwagon of retailers — Five Below (FIVE - Free Report) , American Eagle Outfitters (AEO - Free Report) and Ollie's Bargain Outlet Holdings (OLLI - Free Report) — which also witnessed impressive sales.
The company registered a jump of 5.7% in comparable sales during the festive season compared with 3.4% growth recorded in the year-ago period. Markedly, comps grew across all five key merchandise categories, with Toys, Baby and Seasonal Gift products witnessing exceptional growth. Management expects fourth-quarter fiscal 2018 comparable sales to increase approximately 5%.
But can Target offer investors better upside in the days ahead? Will it be prudent for investors with a long-term plans to stay invested in this Zacks Rank #3 (Hold) stock? You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Here’s a Short Analysis
Sound Fundamentals
Retail is no more restricted to brick-&-mortar and the scenario has drastically changed with the advancement of technology and digital transformation which have altered consumer shopping pattern. In fact, Target has taken steps that have improved prospects in a big way. The company’s initiatives such as the development of omni-channel capacities, diversification and localization of assortments along with emphasis on flexible format stores to generate higher sales productivity bode well. These are going to play a major role in 2019.
It has also rolled out Target Restock program that enables customers to restock their shipping box with essential items online and get them delivered at door steps by the next business day for a nominal charge. Further, in order to improve supply chain and expand delivery capabilities, the company had acquired Grand Junction.
Earlier, Target teamed up with popular online grocery delivery service Instacart to capture the booming online grocery delivery market. Further, the company made significant headway in the same-day delivery race by acquiring Internet-based grocery delivery service Shipt to provide same-day delivery of more than 55,000 groceries, essentials, home, electronics, toys and other products.
Drive Up, an app-based service, is another initiative to facilitate the shopping process. The service allows customers to place orders using the Target app and have them delivered to their cars. Notably, Store Pickup plus Drive Up soared more than 60% year over year, and formed nearly 25% of Target’s digital sales during the November-December period.
Valuation Perspective
A brief glance at some valuation metrics seems to indicate that Target has enough room to run in bourses. Further a Value Score of A also indicates the same.
Target with a price to sales ratio of 0.5 compared with that of industry’s 1.2 indicate that the stock has enough upside potential. The stock also looks attractive with respect to a forward price-to-earnings (P/E) multiple of 13.4x versus industry’s 20.3x. A more-or-less similar picture emerges when comparing EV/EBITDA ratios. Target holds the edge here with an EV/EBITDA ratio of 7.7 lower than 14.9 for the industry.
Bottom Line
The prospects of the players in the industry are closely tied to the purchasing power of consumers. A robust job market and higher disposable income are working in favor of industry participants. Further, the strategy to sell products at discounted prices has helped companies in the space to expand their customer base.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>