EPS of $2.42 increased by 18.6% from previous year
Gross margin of 26.0%
Net income of 1.10B
""Our expectation is to drive more than $15 billion in revenue growth over the next 5 years... we believe that shopping should be more than transactional." - Brian Cornell" - Brian Cornell
Target Corporation reported solid financial results for Q4 2024, achieving a revenue of $30.91 billion, reflecting a year-over-year growth of 26.02%. Despite challenges in the discretionary categories due to economic uncertainties, the company continued to attract consumers through strategic marketing and diverse product offerings. Key metrics indicate a net income of $1.10 billion, which is a 17.09% increase year-over-year. Management expressed confidence in Target's unique retail position, emphasizing planned investments of $4-5 billion to enhance stores, supply chains, and technology to capture a larger share in the growing $4.2 trillion retail market. The path to growth includes a focus on expanding their digital presence and evolving customer engagement strategies through Target Circle and other initiatives.
**Operating Income Margin**: 0.7%
**Growth Strategy Highlights**:
Financial Highlights
Financial Performance Metrics:
- Revenue: $30.91 billion (YoY: +26.02%, QoQ: +20.44%)
- Net Income: $1.10 billion (YoY: +17.09%, QoQ: +29.16%)
- EPS: $2.42 (YoY: +18.63%, QoQ: +30.81%)
- Gross Profit Margin: 25.9%
- Operating Income Margin: 0.7% Growth Strategy Highlights:
- Over $15 billion in planned revenue growth over the next five years.
- Focus on craft seamless customer experience across in-store and digital platforms, with 20% of revenue coming from digital sales.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
30.92B
26.02%
20.44%
Gross Profit
8.04B
24.32%
1.58%
Operating Income
210.00M
-83.80%
-91.34%
Net Income
1.10B
17.09%
29.16%
EPS
2.42
18.63%
30.81%
Key Financial Ratios
currentRatio
0.94
grossProfitMargin
26%
operatingProfitMargin
0.68%
netProfitMargin
3.57%
returnOnAssets
1.91%
returnOnEquity
7.52%
debtEquityRatio
1.36
operatingCashFlowPerShare
$7.14
freeCashFlowPerShare
$5.14
dividendPayoutRatio
46.5%
priceToBookRatio
4.33
priceEarningsRatio
14.39
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Management Insights:
- Brian Cornell emphasized Target's competitive edge: "We're not like other retailers, which is precisely what consumers have told us they value about Target. We're the place they go to discover on-trend, affordable products that they can't find anywhere else."
- Target plans to invest between $4-5 billion in stores, supply chain, and technology, indicating a strong commitment to enhancing customer experience.
- Management recognizes the challenge of economic uncertainty: "Persistent economic uncertainty has consumers taking a cautious approach to spending, particularly in discretionary categories."
"Our expectation is to drive more than $15 billion in revenue growth over the next 5 years... we believe that shopping should be more than transactional." - Brian Cornell
â Brian Cornell
"We expect Target Plus to deliver upwards of $5 billion in annual GMV within the next 5 years." - Cara Sylvester
â Cara Sylvester
Forward Guidance
Management's guidance for 2025 reflects a careful and conservative outlook, projecting net sales growth in the range of 1% and comparable sales to be flat. They anticipate leaner margins driven by ongoing investments, impacting the expected EPS to be between $8.80 and $9.80. Considerations about tariff impacts on pricing and consumer spending trends remain crucial in shaping strategic initiatives. Key focus areas for tracking include the performance of loyalty programs and new digital initiatives intended to drive consumer traffic and retain market share.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
TGT Focus
25.99%
0.68%
7.52%
14.39%
COST
12.70%
3.82%
9.97%
42.08%
BJ
18.00%
3.38%
6.64%
26.59%
DLTR
12.50%
-10.10%
-92.90%
-1.07%
DG
29.40%
2.86%
2.58%
20.43%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Target Corporation is well-positioned for future growth, with a confident management outlook despite near-term economic uncertainties. The strategic investments planned in growth areas like digital channels and owned brands are projected to fuel long-term profitability, supported by strong customer loyalty evidenced in the recent growth of Target Circle memberships. Further analysis should track quarterly performance against management guidance, particularly how consumer spending trends evolve in light of economic conditions. Target remains an appealing investment opportunity for those seeking exposure in the Consumer Defensive sector.
Key Investment Factors
Growth Potential
Target's focus on enhancing its digital infrastructure, combined with significant growth in its loyalty programs and planned new store openings, presents strong growth potential. The commitment to investing in on-trend products ensures relevance in a competitive marketplace, cultivating customer loyalty.
Profitability Risk
Target faces risks tied to economic uncertainty affecting discretionary spending, volatility in supply chain operations, and the impacts of potential tariffs on pricing strategies. Balancing inventory levels to avoid overstocking is noted as essential given current inflation trends.
Financial Position
As of the end of Q4 2024, Target maintained a strong balance sheet with total assets of $57.77 billion, total liabilities of $43.10 billion, and ample cash reserves of $4.76 billion. The current ratio at 0.94 reflects a relatively stable liquidity position, although still under 1, indicating caution is warranted for short-term liabilities.
SWOT Analysis
Strengths
Strong brand loyalty and recognition as a retail destination for affordable, quality products.