Have you been paying attention to shares of Target (TGT)? Shares have been on the move with the stock up 21% over the past month. The stock hit a new 52-week high of $165.48 in the previous session. Target has gained 69.3% since the start of the year compared to the 2.4% gain for the Zacks Retail-Wholesale sector and the 10.8% return for the Zacks Retail - Discount Stores industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 19, 2026, Target reported EPS of $2.46 versus consensus estimate of $2.3.

For the current fiscal year, Target is expected to post earnings of $10.22 per share on $109.61 in revenues. This represents a 35.01% change in EPS on a 4.61% change in revenues. For the next fiscal year, the company is expected to earn $9.27 per share on $112.69 in revenues. This represents a year-over-year change of -9.26% and 2.81%, respectively.

Valuation Metrics

Target may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). The individual style scores for Value, Growth, Momentum and the combined VGM Score run from A through F. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Target has a Value Score of B. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 16.2X current fiscal year EPS estimates, which is not in-line with the peer industry average of 26.7X. On a trailing cash flow basis, the stock currently trades at 11.4X versus its peer group's average of 21.1X. Additionally, the stock has a PEG ratio of 2.89. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this is even more important than the company's VGM Score. Fortunately, Target currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Target meets the list of requirements. Thus, it seems as though Target shares could have a bit more room to run in the near term.

How Does TGT Stack Up to the Competition?

Shares of TGT have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Dollar General Corporation (DG). DG has a Zacks Rank of #2 (Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of F.

Earnings were strong last quarter. Dollar General Corporation beat our consensus estimate by 5.82%, and for the current fiscal year, DG is expected to post earnings of $7.37 per share on revenue of $44.4 billion.

Shares of Dollar General Corporation have gained 5.3% over the past month, and currently trade at a forward P/E of 16.75X and a P/CF of 10.62X.

The Retail - Discount Stores industry is in the top 24% of all the industries we have in our universe, so it looks like there are some nice tailwinds for TGT and DG, even beyond their own solid fundamental situation.

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This article originally published on Zacks Investment Research (zacks.com).

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