Target’s Stock Down 40% In Five Years
While Walmart and Costco have rewarded investors handsomely over the past five years, Target has done the opposite, and a new CEO now carries the weight of proving the struggling retailer can truly turn the corner.
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Target’s (NYSE: TGT | TGT Price Prediction) long-term prospects differ sharply from those of other large American retailers. Its stock is down 40% over the last five years. The S&P 500 is 75% higher over the same period. Walmart’s (NYSE: WMT) is up 128%. Costco’s (NASDAQ: COST) is 109% higher.
Investors have never gotten over the fact that, based on revenue, it is so much smaller than the other two. Last year, Walmart had revenue of $576 billion. Costco’s was $199 billion. Target’s was $104 billion. Target’s revenue dropped 2% for the period. Walmart’s rose approximately 5%. Costco’s was up 8% for its most recent fiscal year.
Target says it is recovering. Short-term, that is true. Revenue rose almost 7% in the most recent quarter to $22.4 billion. However, EPS dropped 24% to $1.71. Why isn’t one following the other higher? “Selling, general and administrative expenses.”
Investors were also concerned when the company made veteran Michael Fiddelke CEO. Former CEO Brian Cornell was made Executive Chair. Cornell has been blamed for most of Target’s problems over the last several years. Fiddelke must prove that the management change was a wise decision.
Target has begun to claw back some of its long-term stock-price losses. It is up 58% this year. If it posts another relatively good quarter, it has a chance to dig itself further out of the 40% hole.
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