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Is Target (TGT) a Great Value Stock Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Target (TGT) is a stock many investors are watching right now. TGT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 17.29 right now. For comparison, its industry sports an average P/E of 23.61. Over the past year, TGT's Forward P/E has been as high as 17.34 and as low as 10.95, with a median of 13.71.

Investors will also notice that TGT has a PEG ratio of 2.44. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TGT's industry currently sports an average PEG of 2.49. Over the last 12 months, TGT's PEG has been as high as 2.45 and as low as 1.83, with a median of 2.11.

We should also highlight that TGT has a P/B ratio of 4.77. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. TGT's current P/B looks attractive when compared to its industry's average P/B of 11.21. TGT's P/B has been as high as 4.77 and as low as 2.88, with a median of 3.71, over the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. TGT has a P/S ratio of 0.74. This compares to its industry's average P/S of 0.8.

Finally, investors should note that TGT has a P/CF ratio of 10.08. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. TGT's current P/CF looks attractive when compared to its industry's average P/CF of 22.87. Within the past 12 months, TGT's P/CF has been as high as 10.08 and as low as 5.68, with a median of 7.70.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Target is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TGT feels like a great value stock at the moment.


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