Target (TGT 0.40%) is hovering around a 52-week low after reporting fourth-quarter fiscal 2024 earnings.

For fiscal 2025, Target is forecasting a modest increase in operating margin and just a 1% increase in net sales. But the retailer expects to turn the business around by 2030 through a $15 billion increase in sales along with efficiency improvements.

A core element of that turnaround plan is Target's embrace of "Tarzhay" spirit. Here's what the phrase means, how Target is planning to return to meaningful growth, and whether the dividend stock is a buy now.

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Say hey to Tar-zhay

The fourth-quarter earnings call was no ordinary one for Target. In his opening remarks, CEO Brian Cornell discussed the need for Target to recapture the joy of retail by leaning into "Tarzhay":

In a world where we operate today, our guests are looking for Tarzhay. Consumers coined that term decades ago to define how we elevate the everything, every day to something special, how we add unexpected fun into shopping that would be otherwise routine. And across categories and platforms, we stayed true to that Tarzhay spirit by helping guests check off the essentials while discovering what's new and exciting.

When listening to the earnings call, talk of "Tarzhay" may have come across as a bit goofy or cheesy. And at least in my experience, the nickname was used to borderline-mock the company's stores for being unnecessarily fancy relative to peers like Walmart. But Target seems willing (if not desperate) to spark a brand makeover. And leaning into "Tarzhay" actually may be a good idea.

The makings of a turnaround

In recent years, Target has failed to differentiate its business from peers like Walmart. Walmart has such a sophisticated supply chain and large footprint that it's pretty much impossible for companies like Target to compete on price, which has been a major issue as cost-conscious consumers pivot to value. So Target needs to come up with ways to get consumers in the door.

The key aspects of Target's five-year growth plan are newness and improving its product mix. Target may not be able to compete on consumer staples with the likes of Walmart, but it can offer fun and exciting products that make the shopping experience more enjoyable. And it's remodeling some existing stores, opening new stores, and enhancing its partnerships with suppliers to add more novelty to its product mix.

There's evidence to support the idea that this strategy is working. The beauty segment has been a rare bright spot. Promotions have gone well too. Target had a solid holiday quarter. And its Valentine's Day theme saw record-high sales.

In addition to beauty, Target has been making partnerships across media, sports, entertainment, and culture to offer exclusive products to get consumers in-store. For example, Taylor Swift exclusives helped drive Black Friday sales. The company also introduced 2,000 new wellness products in January, 600 of which are Target exclusives.

Target continues to make progress in growing its Target Circle loyalty program, adding 13 million new members in 2024. For context, the company said a year ago that the rewards program exceeded 100 million members. On average, members spend three times more than nonmembers, cardholders spend six times more, and Target Circle 360 members -- the highest tier of the program -- spent an average of eight times more. So integrating customers into the rewards program is a major goal for Target.

Target is dirt cheap

Target is making the right moves to differentiate its product offerings and drive customer engagement. But the stock could continue to languish until those efforts translate to top- and bottom-line growth.

Fiscal 2024 marked the third consecutive year that net sales declined, although operating margins have improved and are now closer to pre-pandemic levels. Still, with the fiscal 2025 guidance forecasting barely any growth, there's little reason to be optimistic about Target's turnaround in the near term.

Fortunately, the stock's valuation is dirt cheap, with a price-to-earnings (P/E) ratio of just 12.9 compared to a 10-year median P/E of 15.8. Target also has 53 consecutive years of dividend increases, an impressive track record that earns it a spot on the list of Dividend Kings. And although the company only plans to raise the dividend by a low-single-digit percentage this year, that's not a problem with the stock currently yielding a whopping 3.9%.

Target is a compelling value stock to buy now

Target's inexpensive valuation and high dividend yield make it a worthwhile income stock for investors who believe in its turnaround strategy. "Tarzhay" may sound silly, but if it helps boost sales, investors probably won't mind one bit.

Given that Target has made blunder after blunder in recent years, attempting to restore investor confidence, it's refreshing to see the company go back to its roots and articulate a clear five-year plan so that shareholders can hold management accountable.

Some investors may prefer to keep Target on a watchlist until "Tarzhay" proves effective. But if you're looking to boost your passive income, the stock looks worth buying and holding now, given that much of the bad news may already have been priced in.