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Is Target (TGT) Stock Undervalued Right Now?

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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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Target (TGT - Free Report) is a stock many investors are watching right now. TGT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 13. This compares to its industry's average Forward P/E of 19.88. Over the past year, TGT's Forward P/E has been as high as 16.16 and as low as 10.95, with a median of 14.15.

We should also highlight that TGT has a P/B ratio of 3.43. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 9.20. Over the past year, TGT's P/B has been as high as 4.21 and as low as 2.88, with a median of 3.51.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. TGT has a P/S ratio of 0.53. This compares to its industry's average P/S of 0.62.

Finally, investors will want to recognize that TGT has a P/CF ratio of 6.75. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. TGT's current P/CF looks attractive when compared to its industry's average P/CF of 18.11. Over the past year, TGT's P/CF has been as high as 8.50 and as low as 5.66, with a median of 7.47.

These are only a few of the key metrics included in Target's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, TGT looks like an impressive value stock at the moment.




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