Where Will Target Stock Go Next?
Key Points
Target is down more than 27% over the past year.
The company's stock is trading at a fair valuation, compared to rivals Walmart and Amazon.
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The past year has not been easy for Target (NYSE: TGT). The retailer endured slumping sales and lagged significantly behind its peers. At the time of this writing, its stock is down more than 27% over the past year and over 40% in the past five years.
Toms pressures Target
It was also recently announced that activist investor Toms Capital Investment Management increased its stake in the retailer. This adds more pressure to the company, as it could lead to further shakeups in management and strategy. Could this be the spark that ignites Target's comeback?
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Image source: Getty Images.
Is now the time to buy Target?
If Toms can push for real growth and change within the company, Target's stock may benefit over the coming year. Now may be a good time to buy this stock as it's trading at a forward price-to-earnings ratio (P/E) of around 12, a steep discount compared to its rivals, Walmart and Amazon.
The retailer's third-quarter earnings were a mixed bag. Net sales were down 1.5% year over year, but digital sales were up 2.4%. Target remains a Dividend King, having raised its dividend now for 54 consecutive years.
Target is expanding its same-day delivery operations to compete with industry peers. Same-day delivery was up 35% in Target's latest quarter. The company is also planning $5 billion in capital expenditures to spur growth in 2026.
The company is at risk of shrinking consumer discretionary spending, but if the economy remains steady and the activist investment encourages a turnaround, brighter days could be ahead for shareholders.
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Target, and Walmart. The Motley Fool has a disclosure policy.
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