Are Target Corporation (TGT) shares trading below fair value?
Investors Observer gives Target Corporation (TGT) a strong evaluation score of 76 based on its analysis. The proprietary rating system takes into account the underlying health of a company by analyzing its stock price, earnings and rate of growth. TGT currently holds a better value than 76% of the shares based on these metrics. Long-term buy and hold investors should find the most relevant valuation ranking system when making investment decisions.
TGT’s 12-month price-to-earnings (PE) ratio of 18.8 puts it around the historic average of around 15. TGT is an average value at its current trading price, as investors pay roughly what ‘it is worth in relation to the company’s profits. TGT’s 12-month earnings per share (EPS) of 12.26 justifies what it is currently trading in the market. However, follower PE ratios do not take into account a company’s projected growth rate, resulting in some companies having high PE ratios due to high growth potentially attractive to investors even though current earnings are weak.
TGT’s 12-month PE-to-Growth (PEG) ratio of 1.46 is considered a mediocre value because the market overstates TGT relative to the expected growth in company earnings. TGT’s PEG is derived from its forward price / earnings ratio divided by its growth rate. A PEG ratio of 1 represents a perfect correlation between earnings growth and the stock price. Due to their incorporation of more fundamentals of the overall health of a business and their focus on the future rather than the past, PEG ratios are one of the most widely used valuation metrics by analysts today. ‘hui.
Overall, these valuation metrics paint a pretty poor picture for TGT at its current price due to an overvalued PEG ratio despite strong growth. TGT’s PE and PEG are lower than the market average, resulting in a valuation score of 76.
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