Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of A. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and growth in earnings per share. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.9%. Since the same quarter one year prior, revenues slightly increased by 6.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- TARGET CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, TARGET CORP increased its bottom line by earning $4.53 versus $4.29 in the prior year. For the next year, the market is expecting a contraction of 1.5% in earnings ($4.46 versus $4.53).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Multiline Retail industry and the overall market on the basis of return on equity, TARGET CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The gross profit margin for TARGET CORP is currently lower than what is desirable, coming in at 28.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.22% trails that of the industry average.
Target Corporation operates general merchandise stores in the United States. Target has a market cap of $44.3 billion and is part of the services sector and retail industry. The company has a P/E ratio of 15.00, below the S&P 500 P/E ratio of 18.00. Shares are up 16.8% year to date as of the close of trading on Monday.
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--Written by a member of TheStreet Ratings Staff.
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