Financial Analysis: Target (TGT) versus Its Peers

Target (NYSE: TGT) is one of 12 public companies in the “Variety stores” industry, but how does it compare to its rivals? We will compare Target to similar companies based on the strength of its institutional ownership, valuation, dividends, earnings, analyst recommendations, risk and profitability.

Profitability

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This table compares Target and its rivals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Target 4.08% 23.04% 6.71%
Target Competitors 3.74% 15.07% 6.66%



Risk and Volatility

Target has a beta of 0.72, suggesting that its share price is 28% less volatile than the S&P 500. Comparatively, Target’s rivals have a beta of 0.89, suggesting that their average share price is 11% less volatile than the S&P 500.

Institutional & Insider Ownership

87.2% of Target shares are owned by institutional investors. Comparatively, 76.1% of shares of all “Variety stores” companies are owned by institutional investors. 0.2% of Target shares are owned by company insiders. Comparatively, 13.8% of shares of all “Variety stores” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and target prices for Target and its rivals, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Target 1 11 7 0 2.32
Target Competitors 163 1266 1707 91 2.53

Target currently has a consensus target price of $73.24, suggesting a potential upside of 3.84%. As a group, “Variety stores” companies have a potential upside of 4.35%. Given Target’s rivals stronger consensus rating and higher possible upside, analysts plainly believe Target has less favorable growth aspects than its rivals.

Valuation & Earnings

This table compares Target and its rivals revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Target $71.88 billion $2.93 billion 14.97
Target Competitors $65.92 billion $1.77 billion 21.64

Target has higher revenue and earnings than its rivals. Target is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.

Dividends

Target pays an annual dividend of $2.48 per share and has a dividend yield of 3.5%. Target pays out 52.7% of its earnings in the form of a dividend. As a group, “Variety stores” companies pay a dividend yield of 1.6% and pay out 36.4% of their earnings in the form of a dividend. Target has increased its dividend for 50 consecutive years.

Summary

Target rivals beat Target on 8 of the 15 factors compared.

Target Company Profile

Target Corporation operates as a general merchandise retailer in the United States. The company offers beauty and household essentials, including beauty products, personal and baby care products, cleaning products, paper products, and pet supplies; food and beverage products, such as dry grocery, dairy, frozen food, beverage, candy, snacks, deli, bakery, meat, and produce products; and apparel for women, men, boys, girls, toddlers, infants, and newborns, as well as intimate apparel, jewelry, accessories, and shoes. It also provides home furnishings and décor comprising furniture, lighting, kitchenware, small appliances, home décor, bed and bath products, home improvement products, and automotive products, as well as seasonal merchandise comprising patio furniture and holiday décor; and music, movies, books, computer software, sporting goods, and toys, as well as electronics that include video game hardware and software. In addition, the company offers in-store amenities, which comprise Target Café, Target Optical, Starbucks, and other food service offerings. It sells its products through its stores; and digital channels, including Target.com. As of March 8, 2018, the company operated 1,826 stores. Target Corporation was founded in 1902 and is headquartered in Minneapolis, Minnesota.

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