Which company is better to invest in Target or Walmart?
It's tempting to recommend Target, with its cheaper valuation and a business that is turning around. But Walmart's demonstrated resilience in 2023 and its strong momentum going into 2024 justify its stock's higher valuation. At the two stocks' current valuations, Walmart stock looks like the better buy.
From fiscal 2024 to fiscal 2026, analysts expect Walmart's revenue to rise at a CAGR of 4% as its EPS grows at a CAGR of 35%. Its stock still looks reasonably valued at 26 times forward earnings, its dividend offers a decent forward yield of 1.4%, and management has raised the payout annually for 51 consecutive years.
Target Corporation - Hold
Valuation metrics show that Target Corporation may be undervalued. Its Value Score of A indicates it would be a good pick for value investors. The financial health and growth prospects of TGT, demonstrate its potential to outperform the market. It currently has a Growth Score of A.
The average price target represents 7.85% Increase from the current price of $164.22. What do analysts say about Target? Target's analyst rating consensus is a Moderate Buy. This is based on the ratings of 29 Wall Streets Analysts.
TGT - Performance Comparison. In the year-to-date period, WMT achieves a 16.23% return, which is significantly lower than TGT's 19.28% return. Over the past 10 years, WMT has underperformed TGT with an annualized return of 11.37%, while TGT has yielded a comparatively higher 14.29% annualized return.
On the positive side, Walmart's dividend has been increasing more quickly lately. Walmart just hiked its payout by 9% for 2024, marking a huge acceleration over the prior year's 2% boost. The faster pace of earnings growth today implies that there could be additional big dividend raises ahead for income investors.
This part of its business produced fiscal 2024 revenue of $114.6 billion, up over 13% from 2023. A long history of dividends adds the icing on the cake, providing a source of passive income. These various factors combine to make Walmart a worthy long-term investment.
Target (TGT) is a stock many investors are watching right now. TGT is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 16.17. This compares to its industry's average Forward P/E of 29.25.
TGT sits at a Zacks Rank #2 (Buy), holds a Value Style Score of A, and has a VGM Score of B. Compared to the Retail - Discount Stores industry's P/E of 22.5X, shares of Target are trading at a forward P/E of 16.4X. TGT also has a PEG Ratio of 1.2, a Price/Cash Flow ratio of 12.6X, and a Price/Sales ratio of 0.7X.
Despite the recent stock price increase, Target, with a Value Score of A, appears undervalued compared to the industry. Target's P/E ratio of 16.64 is notably lower than that of the industry's 23.2. This presents a compelling entry point for investors seeking value and growth potential in the long term.
Is Target stock risky?
"The Risk Score is a relevant measure for the assessment of a stock attractiveness. Target Corporation shows a Risk Score of 7.00. 0 corresponds to a very high risk and 10 corresponds to a very low risk." The Risk Score for Target Corporation is significantly higher than its peer group's.
Target is forecast to grow earnings and revenue by 6.6% and 2.6% per annum respectively. EPS is expected to grow by 7.5% per annum. Return on equity is forecast to be 30.7% in 3 years.
Is now a good time to invest in stocks? If you're looking to invest for your future -- five, 10, or 40 years from now -- now is as good a time as ever to buy stocks. Despite ongoing recession fears, it's important to remember the market is forward-looking. Stock values are based on future expected earnings.
Walmart is generally known for offering low prices and a wider selection of products, while Target is known for its stylish and trendy merchandise at slightly higher prices. In terms of pay, it varies based on the position, location, and experience, so it's difficult to make a general comparison.
Recent research from Numerator puts Walmart's U.S. grocery market share at 25.2%, up from 23.7% in 2021. Walmart's market share is larger than the combined total of its next two largest rivals, Kroger KR +1% (10.7%) and Costco (9.9%). Target's grocery share dipped from 3.1% to 3.0% percent during the same timeframe.
Does Walmart have sufficient earnings to cover their dividend? Yes, WMT's past year earnings per share was $1.91, and their annual dividend per share is $0.83. WMT's dividend payout ratio is 43.52% ($0.83/$1.91) which is sustainable.
Walmart Investment Opportunity
Walmart has a volatility of 0.85 and is 1.52 times more volatile than NYSE Composite. 7 percent of all equities and portfolios are less risky than Walmart. You can use Walmart to protect your portfolios against small market fluctuations.
- Local communities.
- Allegations of predatory pricing and supplier issues.
- Labor relations.
- Poorly run and understaffed stores.
- No AEDs in stores (automated external defibrillators)
- Imports and globalization.
In 2030, the Walmart stock will reach $ 97.38 if it maintains its current 10-year average growth rate. If this Walmart stock prediction for 2030 materializes, WMT stock will grow 60.78% from its current price.
If you had invested $1,000 into Walmart five years ago, your investment would be worth around $1,761 as of Nov. 15, according to CNBC's calculations. And if you had invested $1,000 into Walmart a decade ago, your investment would have more than doubled in value and be worth about $2,443 as of Nov.
Who is the biggest investor in Walmart?
| Sr.no | Company | BSE Code |
|---|---|---|
| 1 | Tata Consultancy Services Ltd. | 532540 |
| 2 | Bajaj Finance Ltd. | 500034 |
| 3 | Godrej Consumer Products Ltd. | 532424 |
| 4 | ITC Ltd. | 500875 |
Product and food safety is a top priority and we make sure our products and how they are produced meet or exceed mandatory safety standards. Frequently, we require Target-brand vendors to test beyond regulatory requirements and take special care with children's products and toys.
Target shares surged over 11% in early trading Tuesday as the retailer posted stronger-than-expected earnings for the fourth quarter of 2023. The retail giant reported net income of $1.38 billion, up 57.8% from the year-ago quarter and well above analyst expectations and Target's own guidance.
The Company's operating income margin rate of 5.3 percent was nearly two percentage points higher than last year. Operating income dollars grew by nearly $2 billion compared with 2022, well-above expectations. The Company's efficiency efforts delivered savings of more than $500 million in 2023.
