Target Is Up 66% This Year. Here's Whether the Dividend King Still Has Room to Run After Earnings.

Target (NYSE: TGT) has an incredible dividend history, with 50 consecutive annual dividend increases. That makes it a Dividend King, an elite group that not every company can join. Target has a strong business model that is executed well in both good times and bad. The company is currently working its way out of a bad time, but after gaining 66% in 2026, as of this writing, is there still any value left in the shares?

What went wrong with Target?

Target is a mass-market retailer, but it tends to focus on offering a higher-quality shopping experience. That generally means nicer stores, a more pleasant shopping environment, and higher prices than those of its main peer, Walmart (NASDAQ: WMT), which has an everyday low-price focus. As elevated inflation levels pressured consumers' budgets, Target was out of step with the market.

Image source: Getty Images.

As consumers shifted to lower cost competitors, its revenues and earnings fell. Investors dumped the stock with such vigor that it seemed to suggest a belief that Target would never be able to adjust. At one point, the stock was down nearly 70% from its 2021 high. But a company doesn't join the ranks of Dividend Kings by accident, and the retailer got to work on a turnaround plan. That plan began to bear fruit in 2026, leading to renewed market interest in the stock. In the first quarter, sales rose 6.7%, with same-store sales up 4.4%. The second quarter proved that it wasn't a fluke, with sales up 5.3% and same-store sales rising by 3.8%.

Does Target have more room to run?

That 66% price advance is a very big move in a very short period of time. In fact, it has pushed the company's price-to-sales and price-to-earnings ratios above their five-year averages. That suggests the big value opportunity here is gone, but you have to keep in mind that the stock was deeply depressed due to weak financial performance. So the five-year averages could be skewed low.

While it is completely fair to say that Target doesn't offer the same value as it did at the start of 2026, Walmart's P/S and P/E ratios are 1.1x and 38x, respectively. Target's P/S and P/E ratios are roughly 0.7x and 17x, respectively. Moreover, the high end of those metrics for Target was around 1.1x and 23x, respectively, in the early 2020s. Given that the stock is still nearly 40% below its 2021 high, there could be more room to recover.

Still, deep value investors should probably look elsewhere. Investors have already priced much of the recovery news into the stock price, as reflected in valuation metrics relative to their five-year averages. In fact, if you bought at the low, you may want to consider locking in some profits. Further gains are likely to require Target to continue posting very strong numbers. If it falls short of that, a sell-off wouldn't be surprising.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target and Walmart. The Motley Fool has a disclosure policy.