Costco, Kroger, Walmart and ShopRite are discount retailers which have all had impacts in sales from the pandemic in 2020. Established as the discount division of the Dayton's Company of Minneapolis, MN in 1962, Target Corporation is the second-largest discount retailer in the United States. As of March 09, 2022, the company operated approximately 2,000 stores. In February 2021, the company sold Dermstore LLC (Dermstore). Since September 2019, the companys share price has outperformed the S&P 500 by a large margin, thanks to its strong sales and earnings growth during the pandemic period, digital channel growth and beyond.

Recently a preponderance of analysts advised that the companys equity will still outperform the market. (Basic Earnings Per Share (EPS) has risen steadily from $5.33 (Jan/Feb 2018), $5.56 (Jan/Feb 2019). $6.42 (Jan/Feb 2020), $8.73 (Jan/Feb 2021) to a spectacular $14.23 (Jan/Feb 2022). Conversely, Target reported a bigger-than-expected 90% fall in quarterly earnings in August 2022, and its stock price underperformed the S&P 500 till May 2022.) Continued investment in the companys e-commerce/digital infrastructure and labor may put pressure on its operating margins going forward. Also, as its competitors are catching up with both the opening-up of their stores (post-pandemic) and enhancement of their e-commerce channels, it is not clear whether the macro-performance of Target would last in the medium to long run.

Targets equity positions contain both potential challenges and opportunities to analysts and investors: Recent outperformance relative to the overall market as well as the retail peers might indicate that the companys equity now fully reflects its fundamentals or was even overvalued. Contrarywise, Targets equity may still provide an appealing investment opportunity, given its recent underperformance if the companys expectation and projections for generating free cash flows and growth on a risk-adjusted basis are justifiable in its current valuation. The conclusion as to whether Target is an attractive investment needs to depend on a scrupulous valuation analysis that incorporates its fundamental cash flow generating abilities and prices of the company as well as other comparable companies (Costco, Kroger, Walmart and ShopRite).

Create a prices-to-earnings (P/E) and Price-to-sales (P/S) ratios as ratios between the market value of equity and fiscal year 2023 consensus forecasted (or actual) sales and earnings for the competitor listed here: Costco, Kroger, Walmart and ShopRite utilizing CapIQ.

When solving for your P/E and P/S ratios, consider that market value of equity is the current market capitalization.