Target (NYSE: TGT) has seen a 21% increase in its stock price year-to-date, reaching around $172 per share. This surge comes after a period of shifting consumer sentiment and slowing sales in 2023. The retailer’s fiscal year 2023 results showed progress on margins despite a 2% year-over-year decline in revenues. While sales fell by 3.70% in 2023, the company’s profitability improved significantly, with gross margin rising to 27.6% and operating margin to 5.3%. This led to a 50% increase in earnings per share to $8.94 for the full year. Investors are optimistic about Target’s expected return to growth in 2024, even though weak sales trends may continue in the short term.
Despite some fluctuations, TGT stock has remained relatively stable over the past three years, moving from around $175 in early 2021 to its current price of $172. Returns for the stock were 31% in 2021, -36% in 2022, and -4% in 2023, underperforming the S&P 500 in the last two years. It has been a challenging period for individual stocks to consistently beat the S&P 500, including heavyweights in the Consumer Staples sector and megacap stars. However, the Trefis High Quality Portfolio, comprising 30 stocks, has outperformed the index each year over the same period. Looking ahead, uncertainties such as high oil prices and elevated interest rates may impact Target’s performance and whether it can outperform the S&P 500.
Target’s outlook for fiscal 2024 includes a marginal increase in revenues to $107.9 billion and adjusted earnings per share forecasted at $9.42. Based on these projections, the stock’s valuation is estimated to be $178 per share for fiscal year 2024. The company anticipates a 3% to 5% decline in comparable sales for the first quarter, with earnings per share expected in the range of $1.70 to $2.10. For the full fiscal year, Target is guiding for comparable sales to be flat to up 2%, and earnings per share of $8.60 to $9.60. Additionally, Target recently introduced a new subscription tier, Target Circle 360, offering perks like unlimited free same-day delivery and free two-day shipping for $49/year in an effort to attract customers from competitors like Amazon and Walmart.
Comparing Target to its peers can provide valuable insights into its performance and market positioning. TGT Peers analysis allows investors to see how Target’s stock measures up against its competitors on important metrics. This can help investors make informed decisions about their investment choices. Trefis Market Beating Portfolios provide opportunities for investors to align their portfolios with the latest market trends and potentially outperform the market. Overall, Target’s current stock price reflects optimism about its future growth prospects, despite potential challenges in the short term. Investors will be closely monitoring Target’s performance in the coming quarters to see if the retailer can deliver on its expected return to growth in 2024.
