With higher tariffs often directly impacting consumers, Target’s TGT stock had recently fallen to multi-year lows of under $90 a share, its lowest point since the COVID-19 pandemic.

Trading 47% from its 52-week high of $173, Target stock is surely catching investors’ attention as a buy-the-dip prospect with it noteworthy that TGT now has an annual dividend yield of 4.59%.  

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TGT is at Decade-Lows in Terms of Valuation 

Sales Outlook & P/S Valuation

Although Target has experienced slower sales growth in recent years, its top line is expected to expand 1% in its current fiscal 2026 and is projected to increase another 3% in FY27 to $110.71 billion. That said, FY27 sales projections would only be a 1% increase over the last five years with FY23 sales at $109.12 billion.

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Optimistically, Target has partnered with global commerce platform provider Shopify SHOP to help expand its third-party marketplace and online sales, in a bid to better compete with Walmart WMT and Amazon AMZN. Furthermore, Target stock trades at a decade-low in terms of price to forward sales, at 0.4X. This is well under the optimum level of less than 2X, with its Zacks Retail-Discount Stores Industry average at 0.5X and rival Walmart at 1X.  

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P/E Valuation & EPS Outlook

Also suggesting Target stock is cheap is that TGT is trading at a 10.6X forward earnings multiple compared to its industry average of 19.8X and Walmart's 34.1X. Notably, TGT is at its decade-long low in terms of P/E valuation, offering a significant discount to the high of 30.4X and the median of 16X during this period.

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Despite slower growth on its bottom line as well, Target’s annual earnings are expected to increase by over 1% in FY26 and are projected to rise another 7% in FY27 to $9.62 per share. Grappling with inventory and shrink issues in recent years, Target had lost its post-pandemic profitability mojo but FY27 EPS projections would still be a 59% increase over the last five years, with earnings at $6.02 per share in FY23.

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TGT Technical Analysis

Regarding a potential rebound in Target’s stock turning into an extended or monstrous rally, technical traders will be looking for TGT to retake its 50-day Simple Moving Average (SMA) which is currently at $113 as illustrated by the green line in the technical analysis chart below.

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Target’s Reliable Dividend 

Reassuring and rewarding to those waiting for a turnaround in Target’s stock, the omnichannel retailer is a dividend king, increasing its dividend for more than 50 years (54). Target’s 51% payout ratio also suggests its dividend should be safe and that there is room for more hikes in the future. Plus, Target’s annual dividend yield towers over Walmart’s 1.05%, its industry average of 1.23%, and the benchmark S&P 500’s 1.35% average.  

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Conclusion & Final Thoughts

For now, Target’s stock lands a Zacks Rank #3 (Hold). To that point, there is no doubt that Target stock is appealing to long-term investors at current levels, especially with the company being a dividend king. However, with tariff concerns weighing on the stock market and likely to impact consumers, there could still be better buying opportunities that may allow new investors to add to meaningful positions in TGT or help pre-existing shareholders lower their cost basis.

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This article originally published on Zacks Investment Research (zacks.com).

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