Is Target a better stock than Walmart?
While it's clear that Walmart is a very high quality stock, the overall pick here is Target. With a valuation less than half as rich as Walmart, and a more attractive dividend yield, investors should be willing to bear a little more risk for Target.
Walmart has a TTM P/E ratio of 30.74, meaning its stock price is 30 times its earnings. Target has a P/E ratio of 14.13 over the same period, indicating that the stock market is pricing Walmart stock much higher than Target stock.
The highest analyst price target is $210.00 ,the lowest forecast is $153.00. The average price target represents 3.62% Increase from the current price of $177.21. Target's analyst rating consensus is a Moderate Buy. This is based on the ratings of 30 Wall Streets Analysts.
From fiscal 2024 to fiscal 2026, analysts expect Walmart's revenue to rise at a CAGR of 4% as its EPS grows at a CAGR of 35%. Its stock still looks reasonably valued at 26 times forward earnings, its dividend offers a decent forward yield of 1.4%, and management has raised the payout annually for 51 consecutive years.
Target stock rallied Tuesday to its highest level since April after the retail giant trounced fourth-quarter earnings expectations. Target (TGT) earnings increased 57.7% to $2.98 per share to mark seven consecutive quarters of gains. Revenue rose 1.7% to $31.9 billion, reversing two quarters of declines.
When comparing the two from a financial perspective, Target is slightly more profitable than Walmart. Walmart's lower gross profit margin and net profit margin can be explained by its everyday low price strategy which features a low price guarantee policy.
From the availability of staff, cleanliness of the store, and plentiful checkouts, Target is top-notch in my book. Moving through Target was also easier compared to Walmart, with less dodging of shopping carts and little to no bottle-necking from store staff restocking shelves.
| Company (ticker) | Analysts' consensus recommendation score | Analysts' consensus recommendation |
|---|---|---|
| Amazon.com (AMZN) | 1.30 | Strong Buy |
| Microsoft (MSFT) | 1.32 | Strong Buy |
| Delta Air Lines (DAL) | 1.35 | Strong Buy |
| Nvidia (NVDA) | 1.38 | Strong Buy |
TGT is a #2 (Buy) on the Zacks Rank, with a VGM Score of A. Additionally, the company could be a top pick for growth investors. TGT has a Growth Style Score of A, forecasting year-over-year earnings growth of 5% for the current fiscal year.
TGT is a #3 (Hold) on the Zacks Rank, with a VGM Score of A. It also boasts a Value Style Score of A thanks to attractive valuation metrics like a forward P/E ratio of 18.93; value investors should take notice. 12 analysts revised their earnings estimate upwards in the last 60 days for fiscal 2025.
What if you invested $1,000 in Walmart 20 years ago?
To get a sense of what that sort of underperformance looks like on an account statement, have a look at the chart below. This chart illustrates the disconcerting fact that if you invested $1,000 in Walmart stock 20 years ago, today it would be worth only about $4,400.
An investment of $1,000 at the start of 1980 would be worth over $1.9 million today. Watch Walmart stock trade in real time here.
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For first quarter 2024, the Company expects a comparable sales decline of 3 to 5 percent. First quarter GAAP and Adjusted EPS are both expected to range from $1.70 to $2.10.
Vanguard owns the most shares of Target (TGT). The ownership structure can impact the company's decision making, as large institutional investors may exert influence on the company's management and can also affect the company's stock price with their buying and selling patterns.
The number of visitors to stores and digital channels fell 1.7%. However, Target boosted its profit by offering fewer discounts and benefiting from lower freight, supply-chain and digital-fulfillment costs. It also had stronger sales of some higher-margin items. Net earnings in the quarter rose 58% to $1.38 billion.
Comparable sales dipped 4.4%, a continuation—albeit slowing—of a downward trend for Target. Things aren't likely to turn around soon. The company expects a 3-5% sales decline in 2024's first quarter, according to its fourth-quarter earnings report.
The closest competitor to target.com are walmart.com, wayfair.com and kohls.com. To understand more about target.com and its competitors, sign up for a free account to explore Semrush's Traffic Analytics and Market Explorer tools.
Target's store closures, which it attributed to theft, were the latest in a string of public setbacks. Sales at the company have slowed as inflation weighs on household budgets, and Target has faced backlash for its Pride collection and losses from organized retail crime.
The data shows that the typical Target shopper is a suburban mother between 35 and 44 years of age. The typical Target customer also has some college education and a household income of $80,000.
What does Walmart sell that Target does not?
Walmart is primarily a grocery store focused on stocking a huge range of products at low prices. Target is a home decor and clothing store that also stocks groceries, but they aren't the priority.
In effect, he said, Target has a defensible position as retailer of choice for the middle class based on a price position that keeps the tolerances of its core consumer in mind. Target's presentation of key licenses and brands such as Apple, Ulta and Disney, gives it some additional distinction, Chernofsky said.
| Stock | Sector | Trailing 12-month dividend yield* |
|---|---|---|
| Stanley Black & Decker Inc. (SWK) | Industrials | 3.5% |
| Atmos Energy Corp. (ATO) | Utilities | 2.7% |
| T. Rowe Price Group Inc. (TROW) | Financials | 4.3% |
| Chevron Corp. (CVX) | Energy | 3.9% |
The worst types of stocks to buy: Penny stocks
Penny stocks are also found alongside micro-cap stocks, but this group is characterized by incredibly low share prices instead of low market values. These kinds of investments are incredibly risky for two reasons.
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| Indian Railway Finance Corp Ltd | Specialized Finance | 422.66 |
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| Zomato Ltd | Online Services | 243.21 |
