Should Value Investors Buy Target (TGT) Stock?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Target (TGT) is a stock many investors are watching right now. TGT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 14.18. This compares to its industry's average Forward P/E of 22.28. Over the last 12 months, TGT's Forward P/E has been as high as 16.16 and as low as 10.95, with a median of 13.91.

Investors should also note that TGT holds a PEG ratio of 2. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TGT's industry currently sports an average PEG of 2.24. Over the last 12 months, TGT's PEG has been as high as 3.01 and as low as 1.83, with a median of 2.17.

Another notable valuation metric for TGT is its P/B ratio of 3.99. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 10.62. Over the past year, TGT's P/B has been as high as 4.21 and as low as 2.88, with a median of 3.73.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. TGT has a P/S ratio of 0.59. This compares to its industry's average P/S of 0.71.

Finally, investors should note that TGT has a P/CF ratio of 8.17. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 21.21. Over the past year, TGT's P/CF has been as high as 8.53 and as low as 5.68, with a median of 7.72.

These are just a handful of the figures considered in Target's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that TGT is an impressive value stock right now.

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