Target Looks Cheap, But One Metric Says Otherwise (Earnings Review)

2026-03-03 12:12:59 ET

Introduction

Retailers have been warning about consumer fatigue for over a year. Yet, not all of them have performed poorly. Surely, dollar stores are doing well, as we have seen when we discussed Dollar General ( DG ) and Dollar Tree ( DLTR ). In addition, we know that Walmart ( WMT ) and Costco ( COST ) are near their ATHs as their sales grow and investors seek safe havens. This is why Target Corporation ( TGT ) is facing a specific situation that doesn't reflect the many positive results its peers are reporting. This is both because of its execution and because it is exposed to apparel and household essentials. In fact, as you can see below, Target has not been able to grow its revenues after the pandemic-driven boom. It has also suffered from shrinkage ( an issue Costco didn't have ) and margin compression. The situation is being monitored by many investors, who have often relied on Target for stability and a nice dividend (the yield is currently above 4%, even though it was historically around 2%), which I consider to be more of a trap rather than an enticing yield. ...

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