Shares of Target Corporation (TGT) have generated better returns than both Costco (COST) and Walmart (WMT) so far this year. Target stock is up 25.1% on a YTD (year-to-date) basis. In comparison, the stocks of Costco and Walmart have risen 20.5% and 10.7%, respectively. The S&P 500 has risen 15.7% in the same period.
The stock prices of these large retailers are benefiting from strong growth in comparable sales despite a heightened competitive environment. Target, Walmart, and Costco have successfully managed to drive traffic and, in turn, sales despite Amazon’s expansion into the grocery business. Continued investments in price, expanded assortments, and the expansion of digital fulfillment options have helped these retailers to defend and grow their market shares.
Ready to put your morning scrolling to use? Sign up for Bagels & Stox, our witty take on the top market and investment news straight to your inbox! Whether you’re a serious investor or just want to be informed, Bagels & Stox will be your favorite email.
Target’s strong sales performance during the past year and its phenomenal EPS growth have supported the uptrend in its stock. Meanwhile, Target is expected to continue to report improved comparable sales in the coming quarters, and it’s trading at a lower valuation multiple than Walmart and Costco. Moreover, Target offers a better dividend yield.
Valuation summary and dividend yield
Target stock is trading at a forward PE multiple of 14.2x, significantly below Costco’s and Walmart’s forward PE multiples of 30.3x and 21.7x, respectively. Target stock currently has a dividend yield of 3.1%, which is higher than Walmart’s and Costco’s current dividend yields of 2.1% and 1%, respectively.