Target Corporation (NYSE:TGT) is a large cap company that operates within the multiline retail industry. Its market cap is $31 billion today and the total one-year return is -23.73% for shareholders.
Target stock is underperforming the market. It's beaten down, but it reports earnings on Wednesday. So is it a good time to buy? To answer this question we've turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics...
Earnings-per-Share (EPS) Growth: Target reported a recent EPS growth rate of -36.91%. That's below the multiline retail industry average of 32.69%. That's not a good sign. We like to see companies that have higher earnings growth.
Price-to-Earnings (P/E): The average price-to-earnings ratio of the multiline retail industry is 27.45. And Target's ratio comes in at 11.11. It's trading at a better value than many of its competitors.
Debt-to-Equity : The debt-to-equity ratio for Target stock is 116.4. That's below the multiline retail industry average of 127.64. The company is less leveraged.
Free Cash Flow per Share Growth : Target's FCF has been higher than its competitors over the last year. That's good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It's one of our most important fundamental factors.
Profit Margins : The profit margin of Target comes in at 3.95% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Target's profit margin is below the multiline retail average of 6.92%. So that's a negative indicator for investors.
Return on Equity (ROE) gives us a look at the amount of net income returned to shareholders. It tells us how much profit a company produces with the money shareholders invest. This is another metric that is useful in comparison to other companies in the same industry.
: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Target is 22.89%, and that's above its industry average ROE of 20.95%.
Target stock passes four of our six key metrics today. That's why our Investment U Stock Grader rates it as a buy with caution.