TGT - Target's Aim Is Improving
2024-03-29 08:40:00 ET
Summary
- Target is returning to the slow, steady sales growth and 6% operating margins that prevailed before the unsustainable growth spurt of 2020-21.
- The retailer has corrected its marketing missteps of the past couple of years, and the trend of growing inventory shrink may be ending.
- While cheaper and more capital-efficient than Walmart, Target looks about fairly valued at around $175.
- 1Q 2024 still faces tough comps with last year, so the stock remains a Hold at least until the next earnings release.
Getting Back To Normal
Target Corporation ( TGT ) was a big winner in 2020 and 2021. The store chain did an excellent job adapting to changing customer behavior during the pandemic years, leveraging its stores to fulfill growing online orders by expanding drive-up and same-day delivery options. They also had an advantaged product mix, with more housewares and hard goods desired in the "stay-at-home" economy. This showed up in Target's financials, with sales increasing 36% over those two years, and operating margins reaching 8% from the 6% that had been typical up to 2019....
Target's Aim Is Improving