Target Corporation’s (TGT) shares have taken a hit, dropping 30.2% year-to-date due to unimpressive earnings and guidance. But value investors may see an opportunity to buy the stock on the dip, considering its 53 consecutive years of dividend increases and 4.7% yield.
In Target’s latest earnings report, management outlined strategies to turn the business around, including launching new products, enhancing holiday sales, and modernizing inventory management through its Acceleration Office initiative. However, investors have heard similar promises in the past with limited success.
The company’s weak results stem from low foot traffic and inventory mismanagement. With 96% of net sales fulfilled by stores, Target must balance in-store purchases and online orders. Digital sales have been a bright spot, but supporting growth comes with costs and pressure on inventory management.
Target’s guidance suggests that the turnaround will take time, and results may remain pressured in the short term. The valuation reflects this, with a price-to-earnings (P/E) ratio of 10.5 to 13.5, making it an attractive option for value investors willing to ride out volatility.
While there are several paths to getting Target back on track, including better cost and inventory management, growing the online business, and expanding its loyalty program, progress may be slow. Value investors should consider buying the stock but may want to wait for measurable progress on the turnaround before investing.
Source: https://www.fool.com/investing/2025/05/27/down-big-buy-target-dividend-king-stock