Intrinsic value of Target - TGT

Previous Close

$55.10

  Intrinsic Value

$69.49

stock screener

  Rating & Target

buy

+26%

  Value-price divergence*

+39%

Previous close

$55.10

 
Intrinsic value

$69.49

 
Up/down potential

+26%

 
Rating

buy

 
Value-price divergence*

+39%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of TGT stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 27.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -5.81
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  69,495
  70,885
  72,515
  74,379
  76,471
  78,790
  81,333
  84,103
  87,102
  90,332
  93,799
  97,507
  101,465
  105,678
  110,156
  114,908
  119,944
  125,274
  130,911
  136,867
  143,156
  149,792
  156,789
  164,166
  171,938
  180,123
  188,741
  197,812
  207,358
  217,400
  227,963
Variable operating expenses, $m
 
  61,599
  63,015
  64,634
  66,452
  68,466
  70,676
  73,083
  75,688
  78,494
  81,506
  84,715
  88,153
  91,814
  95,705
  99,833
  104,208
  108,839
  113,737
  118,911
  124,375
  130,140
  136,220
  142,629
  149,381
  156,492
  163,980
  171,861
  180,154
  188,879
  198,056
Fixed operating expenses, $m
 
  4,328
  4,436
  4,547
  4,660
  4,777
  4,896
  5,019
  5,144
  5,273
  5,405
  5,540
  5,678
  5,820
  5,966
  6,115
  6,268
  6,424
  6,585
  6,750
  6,918
  7,091
  7,268
  7,450
  7,636
  7,827
  8,023
  8,224
  8,429
  8,640
  8,856
Total operating expenses, $m
  64,526
  65,927
  67,451
  69,181
  71,112
  73,243
  75,572
  78,102
  80,832
  83,767
  86,911
  90,255
  93,831
  97,634
  101,671
  105,948
  110,476
  115,263
  120,322
  125,661
  131,293
  137,231
  143,488
  150,079
  157,017
  164,319
  172,003
  180,085
  188,583
  197,519
  206,912
Operating income, $m
  4,969
  4,959
  5,064
  5,198
  5,359
  5,546
  5,761
  6,002
  6,270
  6,565
  6,888
  7,252
  7,633
  8,044
  8,486
  8,960
  9,468
  10,011
  10,590
  11,206
  11,863
  12,560
  13,301
  14,087
  14,920
  15,803
  16,738
  17,728
  18,774
  19,881
  21,051
EBITDA, $m
  7,267
  7,298
  7,457
  7,652
  7,882
  8,145
  8,443
  8,775
  9,141
  9,543
  9,979
  10,453
  10,963
  11,512
  12,101
  12,731
  13,404
  14,122
  14,886
  15,698
  16,561
  17,476
  18,446
  19,475
  20,563
  21,715
  22,932
  24,220
  25,579
  27,016
  28,532
Interest expense (income), $m
  999
  860
  899
  944
  996
  1,054
  1,119
  1,189
  1,266
  1,350
  1,439
  1,536
  1,639
  1,749
  1,866
  1,990
  2,122
  2,262
  2,411
  2,567
  2,733
  2,907
  3,092
  3,286
  3,491
  3,707
  3,935
  4,174
  4,426
  4,692
  4,971
Earnings before tax, $m
  3,965
  4,098
  4,165
  4,254
  4,363
  4,492
  4,642
  4,812
  5,003
  5,215
  5,448
  5,717
  5,994
  6,295
  6,620
  6,970
  7,346
  7,748
  8,179
  8,639
  9,130
  9,653
  10,209
  10,801
  11,429
  12,096
  12,803
  13,553
  14,348
  15,190
  16,080
Tax expense, $m
  1,296
  1,107
  1,125
  1,148
  1,178
  1,213
  1,253
  1,299
  1,351
  1,408
  1,471
  1,544
  1,618
  1,700
  1,787
  1,882
  1,983
  2,092
  2,208
  2,333
  2,465
  2,606
  2,756
  2,916
  3,086
  3,266
  3,457
  3,659
  3,874
  4,101
  4,342
Net income, $m
  2,737
  2,992
  3,041
  3,105
  3,185
  3,279
  3,389
  3,513
  3,652
  3,807
  3,977
  4,173
  4,376
  4,595
  4,833
  5,088
  5,362
  5,656
  5,971
  6,307
  6,665
  7,046
  7,453
  7,884
  8,343
  8,830
  9,347
  9,894
  10,474
  11,088
  11,739

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,512
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  37,431
  35,621
  36,440
  37,376
  38,428
  39,593
  40,871
  42,263
  43,770
  45,393
  47,135
  48,999
  50,987
  53,105
  55,355
  57,743
  60,273
  62,952
  65,784
  68,777
  71,938
  75,272
  78,789
  82,495
  86,401
  90,514
  94,845
  99,403
  104,200
  109,246
  114,554
Adjusted assets (=assets-cash), $m
  34,919
  35,621
  36,440
  37,376
  38,428
  39,593
  40,871
  42,263
  43,770
  45,393
  47,135
  48,999
  50,987
  53,105
  55,355
  57,743
  60,273
  62,952
  65,784
  68,777
  71,938
  75,272
  78,789
  82,495
  86,401
  90,514
  94,845
  99,403
  104,200
  109,246
  114,554
Revenue / Adjusted assets
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
Average production assets, $m
  25,073
  25,589
  26,178
  26,851
  27,606
  28,443
  29,361
  30,361
  31,444
  32,610
  33,861
  35,200
  36,629
  38,150
  39,766
  41,482
  43,300
  45,224
  47,259
  49,409
  51,679
  54,075
  56,601
  59,264
  62,069
  65,024
  68,136
  71,410
  74,856
  78,481
  82,295
Working capital, $m
  -718
  -1,559
  -1,595
  -1,636
  -1,682
  -1,733
  -1,789
  -1,850
  -1,916
  -1,987
  -2,064
  -2,145
  -2,232
  -2,325
  -2,423
  -2,528
  -2,639
  -2,756
  -2,880
  -3,011
  -3,149
  -3,295
  -3,449
  -3,612
  -3,783
  -3,963
  -4,152
  -4,352
  -4,562
  -4,783
  -5,015
Total debt, $m
  12,749
  11,526
  12,107
  12,771
  13,516
  14,342
  15,249
  16,235
  17,304
  18,455
  19,690
  21,011
  22,421
  23,922
  25,518
  27,211
  29,005
  30,904
  32,912
  35,034
  37,275
  39,639
  42,132
  44,760
  47,529
  50,445
  53,516
  56,748
  60,149
  63,727
  67,490
Total liabilities, $m
  26,478
  25,255
  25,836
  26,500
  27,245
  28,071
  28,978
  29,964
  31,033
  32,184
  33,419
  34,740
  36,150
  37,651
  39,247
  40,940
  42,734
  44,633
  46,641
  48,763
  51,004
  53,368
  55,861
  58,489
  61,258
  64,174
  67,245
  70,477
  73,878
  77,456
  81,219
Total equity, $m
  10,953
  10,366
  10,604
  10,877
  11,182
  11,521
  11,893
  12,299
  12,737
  13,209
  13,716
  14,259
  14,837
  15,453
  16,108
  16,803
  17,540
  18,319
  19,143
  20,014
  20,934
  21,904
  22,928
  24,006
  25,143
  26,340
  27,600
  28,926
  30,322
  31,791
  33,335
Total liabilities and equity, $m
  37,431
  35,621
  36,440
  37,377
  38,427
  39,592
  40,871
  42,263
  43,770
  45,393
  47,135
  48,999
  50,987
  53,104
  55,355
  57,743
  60,274
  62,952
  65,784
  68,777
  71,938
  75,272
  78,789
  82,495
  86,401
  90,514
  94,845
  99,403
  104,200
  109,247
  114,554
Debt-to-equity ratio
  1.164
  1.110
  1.140
  1.170
  1.210
  1.240
  1.280
  1.320
  1.360
  1.400
  1.440
  1.470
  1.510
  1.550
  1.580
  1.620
  1.650
  1.690
  1.720
  1.750
  1.780
  1.810
  1.840
  1.860
  1.890
  1.920
  1.940
  1.960
  1.980
  2.000
  2.020
Adjusted equity ratio
  0.242
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,737
  2,992
  3,041
  3,105
  3,185
  3,279
  3,389
  3,513
  3,652
  3,807
  3,977
  4,173
  4,376
  4,595
  4,833
  5,088
  5,362
  5,656
  5,971
  6,307
  6,665
  7,046
  7,453
  7,884
  8,343
  8,830
  9,347
  9,894
  10,474
  11,088
  11,739
Depreciation, amort., depletion, $m
  2,298
  2,340
  2,393
  2,454
  2,523
  2,599
  2,683
  2,773
  2,872
  2,978
  3,092
  3,200
  3,330
  3,468
  3,615
  3,771
  3,936
  4,111
  4,296
  4,492
  4,698
  4,916
  5,146
  5,388
  5,643
  5,911
  6,194
  6,492
  6,805
  7,135
  7,481
Funds from operations, $m
  5,222
  5,331
  5,434
  5,559
  5,708
  5,878
  6,071
  6,286
  6,524
  6,785
  7,069
  7,373
  7,706
  8,064
  8,448
  8,859
  9,299
  9,767
  10,267
  10,798
  11,363
  11,962
  12,598
  13,272
  13,986
  14,741
  15,541
  16,386
  17,279
  18,223
  19,220
Change in working capital, $m
  -214
  -31
  -36
  -41
  -46
  -51
  -56
  -61
  -66
  -71
  -76
  -82
  -87
  -93
  -99
  -105
  -111
  -117
  -124
  -131
  -138
  -146
  -154
  -162
  -171
  -180
  -190
  -200
  -210
  -221
  -232
Cash from operations, $m
  5,436
  5,362
  5,470
  5,600
  5,754
  5,929
  6,127
  6,347
  6,590
  6,856
  7,145
  7,455
  7,793
  8,156
  8,546
  8,964
  9,409
  9,885
  10,391
  10,929
  11,501
  12,108
  12,752
  13,434
  14,157
  14,921
  15,730
  16,585
  17,489
  18,444
  19,452
Maintenance CAPEX, $m
  0
  -2,279
  -2,326
  -2,380
  -2,441
  -2,510
  -2,586
  -2,669
  -2,760
  -2,859
  -2,965
  -3,078
  -3,200
  -3,330
  -3,468
  -3,615
  -3,771
  -3,936
  -4,111
  -4,296
  -4,492
  -4,698
  -4,916
  -5,146
  -5,388
  -5,643
  -5,911
  -6,194
  -6,492
  -6,805
  -7,135
New CAPEX, $m
  -1,547
  -516
  -589
  -673
  -755
  -837
  -918
  -1,000
  -1,082
  -1,166
  -1,251
  -1,339
  -1,429
  -1,521
  -1,617
  -1,715
  -1,818
  -1,924
  -2,035
  -2,150
  -2,270
  -2,395
  -2,526
  -2,663
  -2,806
  -2,955
  -3,111
  -3,275
  -3,446
  -3,625
  -3,813
Cash from investing activities, $m
  -1,473
  -2,795
  -2,915
  -3,053
  -3,196
  -3,347
  -3,504
  -3,669
  -3,842
  -4,025
  -4,216
  -4,417
  -4,629
  -4,851
  -5,085
  -5,330
  -5,589
  -5,860
  -6,146
  -6,446
  -6,762
  -7,093
  -7,442
  -7,809
  -8,194
  -8,598
  -9,022
  -9,469
  -9,938
  -10,430
  -10,948
Free cash flow, $m
  3,963
  2,566
  2,555
  2,548
  2,557
  2,583
  2,623
  2,678
  2,748
  2,831
  2,929
  3,038
  3,164
  3,305
  3,462
  3,633
  3,820
  4,024
  4,245
  4,483
  4,739
  5,015
  5,310
  5,626
  5,964
  6,324
  6,708
  7,117
  7,551
  8,014
  8,504
Issuance/(repayment) of debt, $m
  -664
  495
  581
  664
  745
  826
  906
  987
  1,068
  1,151
  1,235
  1,321
  1,410
  1,501
  1,595
  1,693
  1,794
  1,899
  2,008
  2,122
  2,241
  2,364
  2,493
  2,628
  2,769
  2,916
  3,071
  3,232
  3,401
  3,578
  3,763
Issuance/(repurchase) of shares, $m
  -3,485
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -4,149
  495
  581
  664
  745
  826
  906
  987
  1,068
  1,151
  1,235
  1,321
  1,410
  1,501
  1,595
  1,693
  1,794
  1,899
  2,008
  2,122
  2,241
  2,364
  2,493
  2,628
  2,769
  2,916
  3,071
  3,232
  3,401
  3,578
  3,763
Total cash flow (excl. dividends), $m
  -186
  3,061
  3,136
  3,212
  3,303
  3,409
  3,529
  3,665
  3,816
  3,982
  4,164
  4,359
  4,574
  4,807
  5,057
  5,326
  5,615
  5,923
  6,253
  6,605
  6,980
  7,379
  7,803
  8,254
  8,733
  9,240
  9,778
  10,348
  10,952
  11,591
  12,268
Retained Cash Flow (-), $m
  2,004
  -207
  -238
  -273
  -306
  -339
  -372
  -405
  -438
  -472
  -507
  -542
  -579
  -616
  -655
  -695
  -736
  -779
  -824
  -871
  -920
  -970
  -1,023
  -1,079
  -1,136
  -1,197
  -1,260
  -1,326
  -1,396
  -1,469
  -1,545
Prev. year cash balance distribution, $m
 
  794
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3,648
  2,897
  2,939
  2,997
  3,070
  3,157
  3,260
  3,377
  3,510
  3,657
  3,817
  3,995
  4,190
  4,402
  4,631
  4,878
  5,144
  5,429
  5,734
  6,060
  6,409
  6,780
  7,175
  7,596
  8,043
  8,518
  9,022
  9,556
  10,123
  10,723
Discount rate, %
 
  5.30
  5.57
  5.84
  6.14
  6.44
  6.76
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.52
  9.99
  10.49
  11.02
  11.57
  12.15
  12.76
  13.39
  14.06
  14.77
  15.50
  16.28
  17.09
  17.95
  18.85
  19.79
  20.78
  21.82
PV of cash for distribution, $m
 
  3,465
  2,600
  2,479
  2,362
  2,247
  2,132
  2,017
  1,900
  1,781
  1,660
  1,535
  1,410
  1,285
  1,160
  1,037
  916
  800
  689
  586
  491
  404
  328
  261
  203
  156
  117
  85
  61
  42
  29
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Target Corporation operates as a general merchandise retailer. It offers household essentials, including pharmacy, beauty, personal care, baby care, cleaning, and paper products; music, movies, books, computer software, sporting goods, and toys, as well as electronics, such as video game hardware and software; and apparel for women, men, boys, girls, toddlers, infants, and newborns, as well as intimate apparel, jewelry, accessories, and shoes. The company also provides food and pet supplies comprising dry grocery, dairy, frozen food, beverages, candy, snacks, deli, bakery, meat, produce, and pet supplies; and home furnishings and décor, including furniture, lighting, kitchenware, small appliances, home décor, bed and bath, home improvement, and automotive products, as well as seasonal merchandise, such as patio furniture and holiday décor. In addition, it offers in-store amenities, including Target Café, Target Photo, Target Optical, Portrait Studio, Starbucks, and other food service offerings. Target Corporation sells products through its stores; and digital channels, including Target.com. As of January 30, 2016, the company operated 1,792 stores in the United States. Target Corporation was founded in 1902 and is headquartered in Minneapolis, Minnesota.

FINANCIAL RATIOS  of  Target (TGT)

Valuation Ratios
P/E Ratio 11.2
Price to Sales 0.4
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 5.6
Price to Free Cash Flow 7.9
Growth Rates
Sales Growth Rate -5.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 7.6%
Cap. Spend. - 3 Yr. Gr. Rate -3.9%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 100.7%
Total Debt to Equity 116.4%
Interest Coverage 5
Management Effectiveness
Return On Assets 8.8%
Ret/ On Assets - 3 Yr. Avg. 5.2%
Return On Total Capital 11.1%
Ret/ On T. Cap. - 3 Yr. Avg. 6%
Return On Equity 22.9%
Return On Equity - 3 Yr. Avg. 12.3%
Asset Turnover 1.8
Profitability Ratios
Gross Margin 29.7%
Gross Margin - 3 Yr. Avg. 29.5%
EBITDA Margin 10.4%
EBITDA Margin - 3 Yr. Avg. 10%
Operating Margin 7.2%
Oper. Margin - 3 Yr. Avg. 7%
Pre-Tax Margin 5.7%
Pre-Tax Margin - 3 Yr. Avg. 5.8%
Net Profit Margin 3.9%
Net Profit Margin - 3 Yr. Avg. 2.1%
Effective Tax Rate 32.7%
Eff/ Tax Rate - 3 Yr. Avg. 32.7%
Payout Ratio 49.3%

TGT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TGT stock intrinsic value calculation we used $69495 million for the last fiscal year's total revenue generated by Target. The default revenue input number comes from 2017 income statement of Target. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TGT stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.3%, whose default value for TGT is calculated based on our internal credit rating of Target, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Target.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TGT stock the variable cost ratio is equal to 86.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $4222 million in the base year in the intrinsic value calculation for TGT stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 7.8% for Target.

Corporate tax rate of 27% is the nominal tax rate for Target. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TGT stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TGT are equal to 36.1%.

Life of production assets of 11 years is the average useful life of capital assets used in Target operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TGT is equal to -2.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $10953 million for Target - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 493.343 million for Target is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Target at the current share price and the inputted number of shares is $27.2 billion.

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PSMT PriceSmart 84.55 52.48  sell
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TUES Tuesday Mornin 1.80 1.31  sell
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COMPANY NEWS

▶ Target Is a Mess   [04:26PM  TheStreet.com]
▶ Nabors Industries leading the iQ100   [12:36PM  CNBC Videos]
▶ Target gives St. Paul Midway store a big-time revamp (slideshow)   [05:20AM  American City Business Journals]
▶ 3 Stocks That Are Absurdly Cheap Right Now   [Jul-23-17 11:50AM  Motley Fool]
▶ Walmart can shrug off Amazon's grocery run - for now   [Jul-21-17 02:14PM  American City Business Journals]
▶ Grocery battle between Amazon, Wal-Mart may be all hype, little drama   [Jul-20-17 11:50PM  American City Business Journals]
▶ Target Says Things Aren't as Bad as You Think   [Jul-19-17 08:46PM  Motley Fool]
▶ [$$] Target CEO Sees Slowdown in Hispanic Spending   [04:57PM  The Wall Street Journal]
▶ How Amazon Is Destroying Toys R Us   [Jul-17-17 05:09PM  Investopedia]
▶ Why JCPenney Stock Rose on July 13   [12:11PM  Market Realist]
▶ Some Days, the Business World Is Full of Surprises   [Jul-16-17 01:24PM  Motley Fool]
▶ Gap Was the S&P 500s Top Gainer on July 13   [10:01AM  Market Realist]
▶ Target Stock Rose Due to Upbeat Comps Outlook   [07:41AM  Market Realist]
▶ Corporate Earnings In the Spotlight   [07:40AM  InvestorPlace]
▶ Walmart Sells the Cheapest Food: New Study   [08:20PM  TheStreet.com]
▶ What Happened in the Stock Market Today   [05:07PM  Motley Fool]
▶ Dow notches 24th record close of 2017   [04:48PM  MarketWatch]
▶ Target and Yandex climb while Delta slides   [04:32PM  Associated Press]
▶ Target Pops On Positive Same-Store Sales, Earnings Guidance   [04:14PM  Investor's Business Daily]
▶ Target's Upbeat Guidance Fuels Beaten-Down Retail Stocks   [04:09PM  The Wall Street Journal]
▶ Amazon's Destructive Path, the Aftermath   [03:07PM  TheStreet.com]
▶ Target sets opening date for new Franklin St. store in Chapel Hill   [02:55PM  American City Business Journals]
▶ Medford Stop & Shop will become a Target   [02:55PM  American City Business Journals]
▶ Target Jumps After Raising Q2 Forecast   [02:41PM  Barrons.com]
▶ [$$] Target Sees Same-Store Sales Growth   [10:48AM  The Wall Street Journal]
▶ Story Stocks from Briefing.com   [09:38AM  Briefing.com]
Stock chart of TGT Financial statements of TGT Annual reports of TGT
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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