Target trades at 17x forward P/E with margins at cyclical lows, offering potential upside versus Walmart’s 38x multiple.
Jefferies equity analyst Corey Tarlowe said Target (TGT) presents more upside than Walmart (WMT) despite Target’s 47% rally over the past year. Walmart’s market cap stands at $917 billion, while Target’s is $70 billion, with Walmart trading at 38x forward P/E compared to Target’s 17x.
Tarlowe’s bull case hinges on Target’s 4% operating margin, below its 6% historical average, and a new management team improving merchandising. Target’s exposure to discretionary products, unlike Walmart’s food-heavy sales, could drive margin expansion as economic conditions shift.
Both retailers report earnings this week, with Target scheduled for August 19 and Walmart for August 20.