TARGET CORP (TGT) Stock Analysis
TARGET CORP (TGT) Stock Analysis
Analysis from 10-Q filed 2025-11-26. Data as of Q1 2026.
Overall Grade: F (Concerning)
TARGET CORP faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 10.9% | Near cost of capital |
| FCF Margin | 2.7% | Cash flow pressure |
| Debt/Equity | 0.9x | Moderate leverage |
Investment Thesis: Financial metrics indicate concerning business quality with areas requiring attention.
Explore TARGET CORP: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: TARGET CORP earns 10.9% ROIC, Top 50% in Consumer Discretionary
TARGET CORP's trailing-twelve-month ROIC of 10.9% ranks Top 50% in Consumer Discretionary companies (sector median: 8.8%), driven by NOPAT margin of 3.8% combined with asset turnover of 1.8x. Source: 10-Q filed 2025-11-26. Gross margin of 27.9% with operating margin at 4.9% reflects a competitive pricing environment.
| Metric | TGT | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 10.9% | Adequate | Above sector median of 8.8% |
| Return on Equity (ROE) | 24.2% | Excellent | Efficient use of shareholder equity |
| Gross Margin | 27.9% | Adequate | Competitive pricing environment |
| Operating Margin | 4.9% | Warning | Moderate operational efficiency |
Cash Flow: TARGET CORP generates $2.8B FCF at 2.7% margin, positive NaN/8 quarters
TARGET CORP generated $2.8B in free cash flow (TTM), a 2.7% FCF margin, a margin that ranks Top 50% in Consumer Discretionary. Operating cash flow exceeds net income by 1.8x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-11-26.
| Metric | TGT | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 2.7% | Warning | Thin cash margins |
| Free Cash Flow (TTM) | $2.8B | Good | Positive cash generation |
| OCF/Net Income | 1.8x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: TARGET CORP at 0.9x leverage
TARGET CORP's debt-to-equity ratio of 0.9x reflects elevated leverage. Total debt of $14.3B offset by $5.5B in cash. Source: 10-Q filed 2025-11-26.
| Metric | TGT | Rating | Context |
|---|---|---|---|
| Debt to Equity | 0.9x | Adequate | Moderate leverage |
| Net Cash Position | $-8.8B | Warning | Net debt position |
Valuation: TARGET CORP trades at 12.9x earnings
TARGET CORP trades at a P/E of 12.9x. Free cash flow yield of 5.9% offers attractive cash returns relative to price.
| Metric | TGT | Rating | Context |
|---|---|---|---|
| P/E Ratio | 12.9x | Adequate | Reasonable valuation |
| EV/Sales | 0.6x | Excellent | Attractive revenue multiple |
| FCF Yield | 5.9% | Good | Attractive cash return |
| Dividend Yield | 4.3% | Good | Meaningful income |
Capital Allocation: TARGET CORP returns 5.1% shareholder yield
TARGET CORP's total shareholder yield is 5.1% (dividends 4.3% + buybacks 0.9%). Source: 10-Q filed 2025-11-26.
| Metric | TGT | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 5.1% | Good | Dividend + buyback yield combined |
| Buyback Yield | 0.9% | Adequate | Minimal buyback activity |
| Total Capital Returned (TTM) | $2.5B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 10.9% | Top 50% | 1.2x above |
| Free Cash Flow Margin | 2.7% | Top 50% | 1.0x above |
| Gross Margin | 27.9% | Bottom 50% | 0.7x below |
| Operating Margin | 4.9% | Top 50% | 1.0x above |
| Return on Equity (ROE) | 24.2% | Top 50% | 2.3x above |
| P/E Ratio | 12.9x | N/A | - |
Financial Scorecard
| Metric | TGT | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 10.9% | Adequate | Top 50% of sector (median: 8.8%) |
| Free Cash Flow Margin | 2.7% | Warning | Top 50% of sector (median: 2.7%) |
| Gross Margin | 27.9% | Adequate | Bottom 50% of sector (median: 39.5%) |
| Debt to Equity Ratio | 88.6% | Adequate | Elevated but manageable |
| P/E Ratio (Price-to-Earnings) | 12.9x | Adequate | Attractively valued |
| Free Cash Flow Yield | 5.9% | Good | Solid cash yield |
Frequently Asked Questions
Q: What is TARGET CORP's Return on Invested Capital (ROIC)?
TARGET CORP (TGT) has a trailing twelve-month Return on Invested Capital (ROIC) of 10.9%. This compares above the sector median of 8.8%. An ROIC near 8-12% is approximately the cost of capital for most companies.
Q: What is TARGET CORP's Free Cash Flow Margin?
TARGET CORP (TGT) has a free cash flow margin of 2.7%, generating $2.8 billion in free cash flow over the trailing twelve months. A thin FCF margin may indicate heavy reinvestment or operational challenges.
Q: Is TARGET CORP stock overvalued or undervalued?
TARGET CORP (TGT) trades at a P/E ratio of 12.9x, which is above the sector median of N/A. The EV/Sales multiple is 0.6x. Free cash flow yield is 5.9%, which is in line with market averages.
Q: Does TARGET CORP pay a dividend?
TARGET CORP (TGT) currently pays a dividend yield of 4.3%. Including share buybacks, the total shareholder yield is 5.1%. A yield above 4% is attractive for income investors, though sustainability should be verified through payout ratio analysis.
Q: How much debt does TARGET CORP have?
TARGET CORP (TGT) has a debt-to-equity ratio of 0.9x with total debt of $14.3 billion. Net debt position is $8.8 billion.
Q: What is TARGET CORP's revenue and earnings growth?
TARGET CORP (TGT) declined revenue by 1.7% year-over-year. Earnings per share decreased by 8.4% compared to the prior year. Revenue decline may indicate market challenges or industry headwinds.
Q: Is TARGET CORP buying back stock?
TARGET CORP (TGT) repurchased $408.0 million of stock over the trailing twelve months. This represents a buyback yield of 0.9%.
Q: How does TARGET CORP compare to competitors in Consumer Discretionary?
Compared to other companies in Consumer Discretionary, TARGET CORP (TGT) shows: ROIC of 10.9% is above the sector median of 8.8% (Top 43%). FCF margin of 2.7% exceeds the sector median of 2.7% (Top 50% of sector). Gross margin at 27.9% is 11.6 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Consumer Discretionary companies with available SEC filings.
Q: What warning signs should I watch for with TARGET CORP?
Investors in TARGET CORP (TGT) should monitor these potential warning signs: 1) FCF margin is thin at 2.7%, leaving limited buffer for economic downturns. 2) ROIC has been declining, potentially signaling deteriorating competitive position. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-11-26. TTM metrics as of Q1 2026.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.