Target Corp Stock Buy Recommendation Reiterated (TGT)

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 ( TheStreet) -- Target (NYSE: TGT) 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, growth in earnings per share, increase in net income, revenue growth and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

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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.
  • TARGET CORP has improved earnings per share by 17.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TARGET CORP increased its bottom line by earning $4.29 versus $4.01 in the prior year. This year, the market expects an improvement in earnings ($4.36 versus $4.29).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Multiline Retail industry average. The net income increased by 14.8% when compared to the same quarter one year prior, going from $555.00 million to $637.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.1%. Since the same quarter one year prior, revenues slightly increased by 3.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $877.00 million or 37.24% when compared to the same quarter last year. Despite an increase in cash flow, TARGET CORP's cash flow growth rate is still lower than the industry average growth rate of 55.28%.

Target Corporation operates general merchandise stores in the United States. Target has a market cap of $39.76 billion and is part of the services sector and retail industry. The company has a P/E ratio of 13.6, below the S&P 500 P/E ratio of 17.7. Shares are up 3.2% year to date as of the close of trading on Wednesday.

You can view the full Target Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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