Insight Guru Inc.
10/22/2026 | Press release | Distributed by Public on 10/22/2026 12:41
Are You Overpaying For Target Stock Versus Its Rivals
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Target (TGT) stock rose 73.2% over the past year. That marks the biggest gain in a group of six retailers that includes Walmart and Costco. Yet Target still costs less against its earnings than any of those rivals. The price appears to assume Target's sales will keep trailing most of its rivals and its margin, helped by tariff refunds, will not hold. So how much less are you paying, and what do you get for it?
What You Get For Target's Lower Price
You pay far less. Target trades at 15.8 times its earnings over its past four quarters, against 42.4 times for Walmart in the same retail industry.
For that lower price, you get a business that keeps more of each sales dollar as operating profit. Target posts 5.6%, compared with 4.4% for Walmart. In return, you give up growth: Target's sales rose 2.0% over its past four quarters, while Walmart's rose 6.2%.
Amazon, Costco and Home Depot also trade at a higher P/E than Target and grow sales faster. Target's margin sits above Costco's, but Amazon and Home Depot earn higher margins at 12.1% and 12.4%.
| TGT | WMT | AMZN | COST | HD | KR | |
|---|---|---|---|---|---|---|
| Four Fiscal Quarters | ended 2026-08-01 (Q3 FY2026 to Q2 FY2027) | ended 2026-07-31 (Q3 FY2026 to Q2 FY2027) | ended 2026-06-30 (Q3 FY2025 to Q2 FY2026) | ended 2026-08-30 (Q1 FY2026 to Q4 FY2026) | ended 2026-08-02 (Q3 FY2026 to Q2 FY2027) | ended 2026-08-15 (Q3 FY2026 to Q2 FY2027) |
| Market Value (USD billion) | 69.2 | 937 | 2825 | 443 | 312 | 38.9 |
| P/E | 15.8 | 42.4 | 20.9 | 48 | 21.9 | 35.8 (not in the P/E rank) |
| Revenue Growth | 2% | 6.2% | 15.8% | 10.1% | 2.5% | 1.6% |
| Operating Margin | 5.6% | 4.4% | 12.1% | 3.9% | 12.4% | 1.4% |
| Share Price Change, 2025-10-20 to 2026-10-21 | 73.2% | 11% | 21.2% | 7.3% | -16.9% | -5.2% |
Data as of 10/21/2026. Revenue growth, operating margin and the net income in the P/E are for each company's four fiscal quarters in the first row; revenue growth is against the four quarters before. A P/E marked "not in the P/E rank" belongs to a company whose net income was below zero in at least one of those four quarters.
Target's margin lead over Walmart holds so far, but most of it came from tariff refunds. In the quarter that ended August 1, 2026, tariff refunds added 3.7 percentage points to Target's 9.6% operating margin, management said on the August 19 call. Without them, the operating margin would have been 5.9%, against 5.2% a year earlier. Excluding the refunds, management said the gross margin rose about 1 percentage point from a year earlier as Target lapped heavy markdowns and grew its higher-margin revenue streams.
Which Parts Of Target's Business Are Growing?
Target's sales are growing again, but two large categories are lagging. Sales rose 5.3% from a year earlier in the quarter that ended August 1. This marked the second rise in a row following a fall in the quarter that ended January 31.
Management said comparable sales rose 3.8%, driven by more shoppers. It said traffic rose 3.6%, and the average purchase was about flat. Online sales grew faster than store sales, led by more than 25% growth in same-day delivery.
Home and apparel are where Target falls short. In the fiscal year that ended January 31, 2026, home furnishings sales fell 6.5% and apparel sales fell 4.7%. On the August 19 call, management said it is not satisfied with either business. Management calls these high-margin categories and said on the call that the work will continue into 2027 and beyond.
What Target's Guidance Says Without The Refunds
Management expects the business to keep improving without the refunds, though the earnings behind Target's low P/E include them. On the August 19 call, management raised its full-year sales growth guide to around 5%, from 4% in May. It expects the full-year operating margin, excluding tariff refunds, to be about half a percentage point above last year's adjusted 4.6%.
Management also said it judges the business on earnings per share excluding the refunds, and expects some more refunds to come. If Target's margin lead over Walmart fades once the refunds stop and its sales growth slips back, the low P/E would be a fair price for a slow retailer rather than a bargain.
So far, Target's sales have grown for two quarters, though management called growth in home and apparel flattish in the quarter that ended August 1. Its margin is above Walmart's, mostly thanks to refunds in the latest quarter. Target's operating margin without the tariff refunds is the figure to watch when it next reports, expected in November 2026.
Does This Mean You Should Act On TGT?
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Insight Guru Inc. published this content on October 22, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on October 22, 2026 at 18:41 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]