Discount Stores · NYSE
Current Price
$127.87
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on Target Corporation with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
Target Corporation operates as a general merchandise retailer in the United States. The company offers food assortments, including perishables, dry grocery, dairy, and frozen items; apparel, accessories, home décor products, electronics, toys, seasonal offerings, food, and other merchandise; and beauty and household essentials. It also provides in-store amenities, such as Target Café, Target Optical, Starbucks, and other food service offerings. The company sells its products through its stores; and digital channels, including Target.com. As of March 09, 2022, the company operated approximately 2,000 stores. Target Corporation was incorporated in 1902 and is headquartered in Minneapolis, Minnesota.
ROIC (TTM)
9.8%
ROE (TTM)
23.9%
FCF Yield
5.06%
Based on trailing twelve-month data, TGT shows a free cash flow per share of N/A and a ROIC of 9.8%, key inputs for stock valuation using the DCF method. The P/FCF ratio of N/A and FCF yield of 5.06% are important context metrics when evaluating TGT's stock valuation relative to peers.
The intrinsic value of TGT depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether TGT is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $127.87. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on Target Corporation: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on Discount Stores industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting TGT's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Target Corporation, this means projecting how much free cash flow the Discount Stores will produce over the next 5-10 years, then discounting those amounts to today's dollars. TGT's ROIC of 9.8% shows moderate capital returns.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For TGT, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
