Target Corporation (TGT) Intrinsic Value & DCF Valuation
Discount Stores · NYSE
Current Price
$144.15
Intrinsic Value
$132.88
-8.5% margin of safety
What Is Target Corporation's Intrinsic Value?
As of 2026-07-30, the base-case DCF model estimates the intrinsic value of Target Corporation (TGT) at $132.88 per share, compared with a market price of $144.15, a margin of safety of -8.5%. The base case assumes 3.1% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $108.06 to $161.46. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Target Corporation (TGT) Undervalued?
At $144.15, TGT trades about 8.5% above the base-case intrinsic value estimate, a modest premium. By this model the price sits within a normal band, though faster growth than assumed would change the picture.
COMPETITIVE MOAT
↑Brand Loyalty and Recognition
Target has cultivated a strong brand image associated with affordable style and quality. This recognition drives repeat customer visits and a preference over less differentiated competitors.
↑Supply Chain Efficiency
The company's sophisticated supply chain allows for efficient inventory management and rapid product replenishment. This operational advantage supports competitive pricing and product availability.
↑Owned Brands and Exclusivity
Target's success with exclusive owned brands creates unique product offerings. These brands foster customer loyalty and differentiate Target from retailers solely reliant on national brands.
INVESTMENT RISKS
↓Inventory Management Challenges
Balancing inventory to meet demand without overstocking is a constant challenge. Missteps can lead to markdowns, impacting profitability and brand perception.
↓Shifting Consumer Preferences
Rapid changes in fashion, home goods, and lifestyle trends require constant adaptation. Failure to anticipate or respond to these shifts can lead to declining sales.
↓Economic Downturn Impact
As a retailer of discretionary goods, Target is vulnerable to economic slowdowns. Reduced consumer spending power directly impacts sales volume and profitability.
Base case
TGT base case valuation
Intrinsic Value
$132.88
Margin of safety
-8.5%
Expected annual return
-1.6%
Base case assumptions: 3.1% annual growth, 10.0% discount rate, 21x exit multiple, 5 year projection. Data as of 2026-07-30.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the TGT valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Target Corporation respond.
Open DCF Calculator for TGTCompany Overview
Target Corp. engages in the operation and ownership of general merchandise stores. It offers food and general merchandise, clothing and household goods, electronics, and toys. Its brands include A New Day, All in Motion, Art Class, Auden, AVA & VIV, Boots and Barkley, Brightroom, Bullseye's Playground, Casaluna, Cat & Jack, Cloud Island, Colsie, dealworthy, Embark, Everspring, Favorite Day, Figmint, Future Collective, Gigglescape, Good & Gather, Goodfellow & Co, Hearth & Hand with Magnolia, Heyday, Hyde & EEK! Boutique, JoyLab, Kindfull, Kona Sol, Made By Design, Market Pantry, Mondo Llama, More Than Magic, Opalhouse, Open Story, Original Use, Pillowfort, Project 62, Room Essentials, Shade & Shore, Smartly, Smith & Hawken, Sonia Kashuk, Spritz, Sun Squad, Threshold, Universal Thread, up&up, Wild Fable, Wondershop, Xhilaration, California Roots, Casa Cantina, The Collection, Headliner, Jingle & Mingle, Rosé Bae, Photograph, SunPop, and Wine Cube. The company was founded by George Draper Dayton in 1902 and is headquartered in Minneapolis, MN.
Financial Metrics — TGT Stock Valuation Data
Revenue/Share (TTM)
$234.41
FCF/Share (TTM)
$6.89
ROIC (TTM)
9.4%
ROE (TTM)
21.7%
P/FCF
20.9x
EV/EBITDA
10.1x
FCF Yield
4.77%
Debt/Equity
1.15x
On a trailing twelve-month basis, TGT generates free cash flow per share of $6.89 alongside a ROIC of 9.4%, both central inputs for a DCF valuation. Its P/FCF ratio of 20.9x and FCF yield of 4.77% then frame how TGT is priced against peers on a cash flow basis.
Frequently Asked Questions
What is the intrinsic value of TGT?
Target Corporation currently generates $6.89 in free cash flow per share. At the current price of $144.15, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is TGT undervalued?
TGT trades at a P/FCF ratio of 20.9x with a free cash flow yield of 4.77%. This P/FCF is in a moderate range. However, whether TGT is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value TGT stock using DCF?
To perform a DCF valuation on Target Corporation: (1) Start with the trailing free cash flow per share ($6.89) 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 — with a debt-to-equity of 1.15x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to TGT?
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 company will produce over the next 5-10 years, shaped by Discount Stores trends, then discounting those amounts to today's dollars. TGT's ROIC of 9.4% shows moderate capital returns.
How does WACC affect TGT stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For TGT, with a debt-to-equity ratio of 1.15x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 10.1x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See TGT PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Consumer Defensive valuationsDCF and P/E value TGT with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-07-30. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.