Start Buying: Target Corp. Key Performance Indicators

Edited by Juna Yanoyan

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The model rates stocks from 1 to 10, with 10 being the best using a system of advanced mathematics to determine a stock’s expected risk and return. I am using different fundamental and technical factors in order to rank a stock.

Intrinsic value of the stock

Investors should buy stocks selling at a discount to their intrinsic value, and then patiently wait for the fair value of their investments to be realized.

TGT’s intrinsic value is $75.35 the current price is $64.18

Financials

The financial health of the company the higher the better.

Sentiment

This is the investor’s sentiment for the stock.

Analyst ratings

The model assigns a value according to analyst’s recommendation for the stock.

Earnings Consistency

According to this model, each year’s EPS numbers should be better than the previous year’s. One dip is allowed, but the following year’s earnings should be a new high. TGT, annual EPS before extraordinary items for the last 5 years (from earliest to the most recent fiscal year) were 3.35, 2.86, 3.30, 4.00, 4.28, passes this criterion.

Total Debt/Equity

The company must have a low Debt/Equity ratio, which indicates a strong balance sheet. The Debt/Equity ratio should not be greater than 20%.

TGT‘s Total Debt/Equity of 116.46% is very high.

Quarterly EPS Change (This Quarter VS. Same Quarter Last Year)

The EPS growth for this quarter relative to the same quarter a year earlier is above the minimum 18% that this model likes to see for a “good” growth company.

TGT‘s EPS for the past two quarters this year is an increase from 1.04 to 1.06.

Annual Earnings Growth

This model looks for annual earnings growth above 12%, but prefers higher than 20%.

TGT‘s annual earnings growth rate over the past five years is 5.90%

Current Price Level

Investors should keep an eye open for stocks that are trading within 10% of their 52-week highs, as it is likely to continue in its upward trend.

TGT‘s 52 week high is $65.8 current price is $64.18

P/E Ratio

The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be “moderate”, which in this model states is not greater than 15. Stocks with moderate P/Es are more defensive by nature.

The company has a P/E ratio of 14.4, below the average retail industry P/E ratio and below the S&P 500 P/E ratio of 17.7

Insider Ownership

When there is strong insider ownership which I define as 12% or more, management is more likely to act in the best interest of the company, as their interests are right in line with that of the shareholders.

Insiders own 0.31% of TGT’s stock. Management’s representation is not large enough. This does not satisfy the minimum requirement, and companies that do not pass this criteria are less attractive.

Technical Analysis

I am using several technical indicators (MACD, RSI, position Indicators) to forecast the trend of the stock for 6 and 12 months, and assign a value.

Our indicators give a bullish view on TGT:

Highlights from the Scorecard:

RECOMMENDATION for next 6 months: START BUYING on Target Corporation. The company has demonstrated a pattern of positive earnings per share growth over the past two years.

The company has a P/E ratio of 14.4 times, below the average retail industry P/E ratio and below the S&P 500 P/E ratio of 17.7 times.

Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company’s shares by a sharp 25.28% year to date, a rise that has exceeded that of the S&P 500 Index.

The company’s strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Regarding the stock’s 12 months course, although almost any stock can fall in a broad market decline, TGT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year. Our main concern is the higher level of debt than we prefer.