Can Target Keep Up the Momentum in 2020?

Target (NYSE: TGT) is one of the largest retailers in the United States, operating a chain of 1,800 stores and an online channel that markets a diverse set of fashion, home, healthcare, and grocery consumer items. The stock delivered a phenomenal 2019 for shareholders, where the share price nearly doubled to close out the year at $128. Target struggled from 2013 to 2019, with intense competition from the likes of Walmart (NYSE: WMT), Amazon (NASDAQ: AMZN), Costco (NASDAQ: COST), Dollar General (NYSE: DG), and Dollar Tree (NASDAQ: DLTR).

Target has struggled with flat revenue growth and margin compression in recent years, but financial results in 2019 were encouraging. The company is set to grow more than 4% on the top line for the fiscal year ending in January 2020, with earnings expected to rise over 18%. Analysts are forecasting continued modest revenue growth and roughly 10% earnings growth moving forward, both of which compare favorably to peers. The company is benefiting from more profitable small-format stores, a growing online channel, and same-day fulfillment services.

These trends are catalyzing investor confidence and driving shares higher, but a great charge by a relatively low-growth company can signal inflation of valuation metrics that push the stock firmly out of buy territory for value investors.

Source Fool.com