We find Target to be very overvalued versus Walmart. Here are the factors we considered:
P/S Ratio
TGT's P/S multiple of 1.1x is
significantly higher than the figure of 0.7x for WMT
Revenue Growth
Over the last twelve months, Target has seen revenues change by 19.8% -
meaningfully higher than the figure of 5.3% for WalmartIn the twelve-month period before that, revenues for Target had changed by 3.7% -
comparable to the 1.8% change for Walmart
Operating Margin
Target's operating margin was 6.9% for the most recent twelve-month period, which is
comparable to Walmart's operating margin of 5.2%Over the last twelve months, the operating margin for Target changed by 1 pp (percentage points) -
roughly around the change of 1 pp for WalmartIn the twelve-month period before that, the operating margin for Target had changed by 0.5 pp -
worse than the change of 2.2 pp for Walmart over the same period
Note: TGT reports its results on a fiscal year ending 1/28andWMT reports its results on a fiscal year ending 1/31
Target Walmart Valuation: Current Market Cap $103 Bil $391 Bil Current P/S Multiple 1.1x 0.7xTarget significantly higher Revenues: Total Revenue (LTM) $94 Bil $549 Bil LTM Revenue Growth (Current) 20% 5.3%Target meaningfully higher LTM Revenue Growth (Year-ago) 3.7% 1.8%Similar for both companies Operating Income/Margin: Operating Income (LTM) $6.5 Bil $29 Bil Operating Margin (LTM) 6.9% 5.2%Similar for both companies LTM Margin Change (Current) 1 pp 1 ppSimilar for both companies LTM Margin Change (Year-ago) 0.5 pp 2.2 ppSimilar for both companies