Target (TGT) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research
·3-min read

Target (TGT) closed the most recent trading day at $154.25, moving -0.62% from the previous trading session. This move lagged the S&P 500's daily gain of 1.2%. Meanwhile, the Dow gained 0.53%, and the Nasdaq, a tech-heavy index, added 1.64%.

Prior to today's trading, shares of the retailer had lost 1.4% over the past month. This has lagged the Retail-Wholesale sector's gain of 1.34% and was narrower than the S&P 500's loss of 2.23% in that time.

Investors will be hoping for strength from TGT as it approaches its next earnings release, which is expected to be November 18, 2020. In that report, analysts expect TGT to post earnings of $1.53 per share. This would mark year-over-year growth of 12.5%. Our most recent consensus estimate is calling for quarterly revenue of $20.68 billion, up 10.77% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.18 per share and revenue of $87.94 billion. These totals would mark changes of +12.36% and +12.58%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for TGT. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.38% higher. TGT is holding a Zacks Rank of #2 (Buy) right now.

Investors should also note TGT's current valuation metrics, including its Forward P/E ratio of 21.62. This represents a no noticeable deviation compared to its industry's average Forward P/E of 21.62.

Meanwhile, TGT's PEG ratio is currently 2.99. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Retail - Discount Stores stocks are, on average, holding a PEG ratio of 2.99 based on yesterday's closing prices.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 123, putting it in the top 49% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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