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Based on Target Corporation’s (NYSE:TGT) earnings update in February 2019, the consensus outlook from analysts appear somewhat bearish, as a 2.1% rise in profits is expected in the upcoming year, relative to the higher past 5-year average growth rate of 2.5%. Currently with trailing-twelve-month earnings of US$2.9b, we can expect this to reach US$3.0b by 2020. Below is a brief commentary on the longer term outlook the market has for Target. For those interested in more of an analysis of the company, you can research its fundamentals here.
Exciting times ahead?
The view from 16 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for TGT, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 3.6% based on the most recent earnings level of US$2.9b to the final forecast of US$3.1b by 2022. EPS reaches $6.57 in the final year of forecast compared to the current $5.54 EPS today. However, the near term margins may change heading into 2022, from the current levels of 3.9% to 3.8%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Target, I’ve put together three pertinent factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Target worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Target is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Target? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.