Target Corporation (TGT) Stock Valuation — DCF Analysis
Discount Stores · NYSE
Current Price
$135.03
Intrinsic Value
$164.79
+18.1% margin of safety
COMPETITIVE MOAT
↑Loyal Customer Base
Target's strong Q1 traffic growth indicates a resurgence in customer engagement. This loyalty is built on a consistent brand experience and curated product assortment.
↑Omnichannel Integration
Seamless integration of store and digital sales, with traffic lifting both, demonstrates effective execution of their omnichannel strategy. This convenience drives repeat business.
↑Category Strength
Gains across all six core categories highlight Target's ability to maintain relevance and appeal in diverse retail segments. This broad appeal reduces reliance on any single product area.
INVESTMENT RISKS
↓Economic Sensitivity
While S&P 500 targets are rising, broader economic shifts could still impact consumer discretionary spending. Target's performance is tied to the health of the consumer economy.
↓Competitive Pressures
The discount store industry remains highly competitive. While traffic is up, maintaining market share against other retailers requires continuous innovation and efficient operations.
↓Inventory Management
Sustaining sales growth requires careful inventory management. Unexpected shifts in demand or supply chain disruptions could lead to markdowns or stockouts.
Base case
TGT base case valuation
A base case discounted cash flow model for TGT estimates an intrinsic value of about $164.79 per share, against a current price of $135.03. The model assumes 9.0% annual free cash flow growth, a 10.0% discount rate, and a 20x exit multiple.
Intrinsic Value
$164.79
Margin of safety
+18.1%
Expected annual return
+4.1%
Base case assumptions: 9.0% annual growth, 10.0% discount rate, 20x exit multiple, 5 year projection. Data as of 2026-06-15.
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 Corporation operates as a prominent general merchandise retailer throughout the United States. Its extensive product range includes a wide array of food items like perishables, dry groceries, dairy, and frozen goods, alongside apparel, accessories, home décor, electronics, toys, seasonal offerings, and essential beauty and household products. Beyond merchandise, Target stores often feature convenient in-store amenities such as Target Café, Target Optical, Starbucks outlets, and various other food service options. The company facilitates sales through its physical retail locations and its digital platform, Target.com. As of March 9, 2022, Target maintained a network of approximately 2,000 stores. Founded in 1902, the corporation's headquarters are situated in Minneapolis, Minnesota.
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
19.6x
EV/EBITDA
9.5x
FCF Yield
5.10%
Debt/Equity
1.15x
Based on trailing twelve-month data, TGT shows a free cash flow per share of $6.89 and a ROIC of 9.4%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 19.6x and FCF yield of 5.10% are important context metrics when evaluating TGT's stock valuation relative to peers.
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 $135.03, 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 19.6x with a free cash flow yield of 5.10%. 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 9.5x, 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 2026-06-15. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.