Back to top

Image: Bigstock

Is Target (TGT) Stock Undervalued Right Now?

Read MoreHide Full Article

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

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 an A grade for Value. The stock holds a P/E ratio of 16.59, while its industry has an average P/E of 23.13. Over the last 12 months, TGT's Forward P/E has been as high as 17.67 and as low as 10.95, with a median of 13.71.

Investors should also note that TGT holds a PEG ratio of 2.35. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TGT's industry has an average PEG of 2.43 right now. Over the past 52 weeks, TGT's PEG has been as high as 2.50 and as low as 1.83, with a median of 2.11.

Investors should also recognize that TGT has a P/B ratio of 4.62. 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 11.05. Over the past 12 months, TGT's P/B has been as high as 4.91 and as low as 2.88, with a median of 3.71.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. TGT has a P/S ratio of 0.72. This compares to its industry's average P/S of 0.79.

Finally, investors should note that TGT has a P/CF ratio of 9.75. 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 P/CF compares to its industry's average P/CF of 22.54. Within the past 12 months, TGT's P/CF has been as high as 10.37 and as low as 5.68, with a median of 7.70.

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.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Target Corporation (TGT) - free report >>

Published in