As of July 16, 2025, Target Corp's estimated intrinsic value ranges from $105.68 to $154.05 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $154.05 | +50.7% |
| Discounted Cash Flow (5Y) | $130.50 | +27.7% |
| Dividend Discount Model (Multi-Stage) | $105.68 | +3.4% |
| Dividend Discount Model (Stable) | $107.66 | +5.3% |
| Earnings Power Value | $130.21 | +27.4% |
Is Target Corp (TGT) undervalued or overvalued?
With the current market price at $102.21, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Target Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.63 | 0.75 |
| Cost of equity | 6.8% | 9.0% |
| Cost of debt | 4.0% | 4.6% |
| Tax rate | 21.6% | 21.9% |
| Debt/Equity ratio | 0.34 | 0.34 |
| After-tax WACC | 5.8% | 7.7% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $131 | $71,881M | 73.9% |
| 10-Year Growth | $154 | $82,582M | 57.2% |
| 5-Year EBITDA | $125 | $69,352M | 72.9% |
| 10-Year EBITDA | $151 | $81,204M | 56.5% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $4,758M |
| Discount Rate (WACC) | 7.7% - 5.8% |
| Enterprise Value | $62,052M - $81,445M |
| Net Debt | $12,586M |
| Equity Value | $49,466M - $68,859M |
| Outstanding Shares | 454M |
| Fair Value | $109 - $152 |
| Selected Fair Value | $130.21 |
| Metric | Value |
|---|---|
| Market Capitalization | $46440M |
| Enterprise Value | $59026M |
| Trailing P/E | 11.10 |
| Forward P/E | 11.62 |
| Trailing EV/EBITDA | 6.95 |
| Current Dividend Yield | 432.41% |
| Dividend Growth Rate (5Y) | 11.10% |
| Debt-to-Equity Ratio | 0.34 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $46.22 |
| Discounted Cash Flow (5Y) | 25% | $32.63 |
| Dividend Discount Model (Multi-Stage) | 20% | $21.14 |
| Dividend Discount Model (Stable) | 15% | $16.15 |
| Earnings Power Value | 10% | $13.02 |
| Weighted Average | 100% | $129.15 |
Based on our comprehensive valuation analysis, Target Corp's intrinsic value is $129.15, which is approximately 26.4% above the current market price of $102.21.
Key investment considerations:
Given these factors, we believe Target Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.