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Target Corporation: Improvements In Performance Will Be Difficult
Summary
- Target has outperformed the S&P 500 with a 15% surge in stock price YTD.
- While TGT management has outlined their focus on growing revenue and operating margin, there is uncertainty in the success of these plans.
- Possible headwinds in the short term may lead to continued pressure on Target's top line and thinner margins.
- If improvements in operating margins are realized, the Company would increase their ROIC and their stock valuation.
- Until significant progress is achieved to improve operating margin, my rating on Target is a "Hold".
I am an incoming undergraduate economics student in the UK. Driven by a desire to understand how companies function and operate, I delved into financial markets, and I enjoy the process of equity research and financial modelling. With a long investment horizon, I am a value investor who uses stock fundamentals to drive investment decisions. I am hoping to hone my financial knowledge and analysis through analyzing real life companies and understanding their operations at a deep level. I am trying to focus on a wide range of companies from different sectors to develop a well-rounded understanding of the different sectors in the economy, and examine their interconnected effects on one another. Through recasting financial statements, I aim to focus on economic earnings to develop a conceptually sound and accurate picture of businesses, so that I can apply and compare the performance of different businesses using the same metrics. I am also constantly trying to improve my financial knowledge and modelling. Through coursework and textbooks that I have parsed through on my own time, I have acquired and developed an understanding of finance concepts that I wish to apply through analysis. I would love to learn and contribute to the community here!
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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