Morningstar Rating

Stock Research and Analysis

by Ken Perkins, CFA

Bulls Say

If Target improves its value proposition and restores its differentiated position in key categories, comp growth could accelerate and earnings could increase sharply as fixed selling, general, and administrative costs are leveraged.
A food offering, omnichannel platform, and loyalty program should help to drive store traffic, delivering enough expense leverage to offset the negative impact on gross margins from those initiatives.
Target's decision to exit Canada should free up resources and allow management to focus exclusively on driving results in the U.S. business. Read more 

Bears Say

Target's ROICs have declined since the PFresh initiative transitioned a larger portion of assets to lower-return food business.
Economies of scale in the food category aren't an advantage against Wal-Mart and Kroger, the number-one and -two share leaders in food, respectively, or Costco, which uses both food and gasoline as loss leaders to drive traffic.
Amazon's dominant e-commerce business could challenge Target's general merchandise business over time. Read more 


Although Target's returns on invested capital have declined over the past few years, we believe management has made the right strategic decision to deploy (to a much higher degree) inelastic food products. In our view, driving consistent comps in general   Read more 


Target is one of the largest retailers in North America, with about 1,800 units across the U.S. Target's large-format stores offer general merchandise and now a full assortment   Read more 

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