Should Investors Buy Target (TGT) Stock After Favorable Q4 Results?

Core Insights - Target (TGT) reported favorable Q4 results but issued cautious guidance, leading to a 3% dip in stock price [1] - Despite the dip, Target shares are trading at a significant discount compared to competitors like Walmart (WMT) [1] Q4 Financial Performance - Q4 sales reached $30.91 billion, slightly above estimates of $30.76 billion but down from $31.91 billion year-over-year [2] - Comparable sales for existing stores grew by 1.5%, driven by strong traffic and digital performance [2] - Digital comparable sales increased by 8.7% during Q4, with same-day deliveries rising by 25% [2] - Q4 EPS was $2.41, exceeding expectations of $2.25 by 7%, compared to $2.94 per share in the same quarter last year [2][3] Full Year Results - For fiscal 2025, total sales decreased by approximately 1% to $106.57 billion, and annual earnings also fell by 1% to $8.86 per share [4] Guidance and Outlook - Target anticipates profit pressure in Q1 due to consumer uncertainty and tariff concerns [5] - Full-year EPS guidance for FY26 is projected at $8.80-$9.80, below the current Zacks Consensus of $9.34 per share [5] - Sales growth for FY26 is forecasted at 1%, below the current projection of $108.64 billion [7] - Zacks estimates suggest a 9% increase in EPS for FY27 and over 3% sales growth to $112.66 billion [5][7] Valuation and Market Position - Target's stock is currently around $116, with a forward P/E ratio of 12.5X, compared to Walmart's 36X [8] - Target's online sales growth is seen as promising, potentially leveling the competitive landscape with Walmart and capturing market share from Amazon (AMZN) [8]