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1 Growth Stock Down 41% to Buy Right Now
TGTTarget(TGT) The Motley Fool·2025-04-06 12:30

Core Viewpoint - Target has faced significant challenges in 2025, with a 22% decline year-to-date and a 41% drop from its 52-week high, primarily due to shifting consumer spending trends and uncertainties surrounding tariffs [1][4]. Financial Performance - For the fiscal year ending February 1, net sales decreased by 0.8% year-over-year, and adjusted earnings per share (EPS) fell by 1% to 8.86[4].−Inthefourthquarter,comparablesalesincreasedby1.58.86 [4]. - In the fourth quarter, comparable sales increased by 1.5% year-over-year, with store traffic rising by 2.1%, and digital comparable sales surged by 8.7% [5]. Future Guidance - Management projects net sales growth of approximately 1% for fiscal 2026, with an adjusted EPS target of 9.80, reflecting a 10.6% annual increase [7][8]. - The company aims to achieve over 15billioninrevenuegrowthoverthenextfiveyears,focusingonmaintainingorgrowingmarketshareacrossmostcategories[6].ValuationandInvestmentPotential−Target′sstockiscurrentlytradingataforwardprice−to−earnings(P/E)ratioof11,whichissignificantlylowerthanindustrypeerslikeDollarGeneralat16andWalmartat34,indicatingapotentialundervaluation[12].−Thecompanymaintainsacommitmenttoreturningcashtoshareholders,withaquarterlydividendof15 billion in revenue growth over the next five years, focusing on maintaining or growing market share across most categories [6]. Valuation and Investment Potential - Target's stock is currently trading at a forward price-to-earnings (P/E) ratio of 11, which is significantly lower than industry peers like Dollar General at 16 and Walmart at 34, indicating a potential undervaluation [12]. - The company maintains a commitment to returning cash to shareholders, with a quarterly dividend of 1.12 per share, yielding 4.3%, and the potential to extend its 53-year streak of annual dividend increases [7].