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Want To Invest In Target Corporation (NYSE:TGT)? Here's How It Performed Lately

Simply Wall St

When Target Corporation (NYSE:TGT) announced its most recent earnings (03 August 2019), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Target performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see TGT has performed.

Check out our latest analysis for Target

How Well Did TGT Perform?

TGT's trailing twelve-month earnings (from 03 August 2019) of US$3.1b has increased by 2.2% compared to the previous year.

However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 2.5%, indicating the rate at which TGT is growing has slowed down. What could be happening here? Well, let's examine what's going on with margins and whether the whole industry is experiencing the hit as well.

NYSE:TGT Income Statement, October 23rd 2019

In terms of returns from investment, Target has invested its equity funds well leading to a 27% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 8.7% exceeds the US Multiline Retail industry of 6.3%, indicating Target has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Target’s debt level, has declined over the past 3 years from 19% to 16%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 86% to 97% over the past 5 years.

What does this mean?

Though Target's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Target to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for TGT’s future growth? Take a look at our free research report of analyst consensus for TGT’s outlook.
  2. Financial Health: Are TGT’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 03 August 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.