Should You Buy Target Stock At This Price? Trefis Team Mon, October 12, 2026 at 3:28 PM EDT 4 min read TGT -0.01% WMT +1.55% AMZN -1.11% COST +1.32% HD -0.04% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Shares of Target (TGT) currently trade at 15.9 times earnings, below the 21.9 multiple for the median S&P 500 company, though one-time tariff refunds flatter that figure. This valuation gap persists even after the stock returned 80% over the past twelve months. The disconnect suggests one of two scenarios: either a fundamentally sound retailer remains on sale, or the broader market doubts Target can sustain its recent results. So what does a buyer actually get at this price?
First, investors acquire a retailer that is growing its top line again. During fiscal Q2 2026, Target generated net sales of $26.5 billion, representing a 5.3% increase from a year earlier. Comparable sales rose 3.8%, driven by a higher volume of shoppers. Store traffic rose 3.6%, while the average ticket was about flat.
Buyers also acquire a strong cash generator. Over the last twelve months, Target's operations brought in $8.7 billion of cash, about twice its $4.4 billion of net income. At its current price, the stock costs 8.0 times that operating cash flow, against the 14.7 multiple for the S&P 500. Judged purely on the past year, Target resembles a growing business that successfully converts profit into cash while trading at a below-market multiple.
How Has Target Done Over Three Years?
Over three years, Target has not grown at all. Although Target grew its revenue by 2.0% over the last twelve months, its three-year average shows a decline of 0.1% a year. That average reflects consecutive top-line drops. Revenue fell 1.5% in the prior twelve months, following a decline of 0.7% in the twelve months before that.
Target's weak spots are the home and apparel categories. During Target's latest full fiscal year, home furnishings revenue fell 6.5%, and apparel and accessories revenue fell 4.7%. Each of these two categories accounts for about 15% of the company's revenue.
Furthermore, recent profit benefited from a temporary boost. Target earned $4.11 a share in fiscal Q2 2026, but tariff refunds supplied $1.65 of that total. Excluding the refunds, earnings per share were still about 20% higher than a year earlier. Management's full-year guidance does not count on any more refunds. Yet even with those refunds included, Target recorded an operating margin of 5.6% over the last twelve months, against the 18.5% margin for the median S&P 500 company. Given the flat three-year record and the absence of future refunds in the guidance, the current stock price appears to reflect market skepticism that recent improvements will last.
What Is Target Doing About Home And Apparel?
Target is actively cutting prices and reworking its inventory. On the fiscal Q2 2026 call, management noted the company had lowered prices on more than 10,000 items over twelve months. Target followed that by reducing prices on nearly 2,000 more home and apparel items on September 29, 2026.
During the same call, management characterized growth in apparel and home as flattish and openly admitted that performance in those segments is not where it needs to be. The company expects turnaround efforts in those departments to continue into 2027 and beyond.
Beyond category-specific fixes, executives have set new financial expectations for the entire business. Target raised its full-year 2026 guidance for net sales growth to around 5%, up from its previous estimate of around 4%. The company also expects to achieve an operating margin of roughly 5.1% excluding tariff refunds, which would mark an improvement from last year's adjusted 4.6%.
Ultimately, buying the stock at this price looks less like discovering an overlooked business and more like a wager on operational execution. The core bet is that Target can fix its home and apparel segments, partly through price cuts. If the company can deliver a full-year 2026 operating margin of roughly 5.1% or more, excluding refunds, it would suggest that Target can cut prices while protecting its profit.
Does This Mean You Should Act On TGT?
Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.
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