Target: investing in the e-commerce sector

Target Corporation, stock, Target: investing in the e-commerce sector

Target Corporation is an American retail retailer, one of the largest in the United States. The corporation's supermarkets are popular not only in the States, but also in other countries, since the choice of goods is huge, the products themselves are characterized by low prices, but at the same time high quality is maintained. Target appeared in 1902 as the Dayton Dry Goods Company.

After years of its development, the company took the sixth place in the ranking of the largest American concerns operating in the e-commerce sector. Target's staff exceeds the 100,000 mark. Each year, the issuer fixes the yield at the level of $60 billion.

The mass-market network is represented by a wide range of various products in different categories:

  • beauty and health (accounts for 23.5% of the corporation's trade turnover);
  • everything to replenish the wardrobe (19.9%);
  • product direction (19.4%)
  • everything for the home decor (19%)
  • electrical engineering (16.9%).

Advertising, rent, and membership fees account for 1.2% of the profitability.

For the most part, products are brought to stores after passing through the centers for the redistribution of goods. The assortment that is sold on the website and through the application is delivered by carriers, for which the Shipt subsidiary issuer is responsible.

Target products are distinguished by their indicative quality and low cost. Supermarket shelves are filled with a large number of little-known, but worthy brands, there are also popular brands on them. The corporation very often arranges promotions, discount days and other pleasant offers for visitors.

Dividend payments

Target Corporation is a dividend aristocrat. For 25 years, it has been increasing the amount it pays to shareholders every 12 months. At the end of last year, the company's profitability was 1.4%. Last month, Target raised the payout by 32%, now it reaches $0.90 per paper. This is a certain progress that was achieved after the coronavirus outbreak.

According to Michael Fiddelke, who is the CFO, the main task for Target is to engage in reinvestments and comply with financial strategies, but the issuer does not forget to maintain high dividend payments.

According to the results of the last 3 years, stock prices have jumped several times. The instrument has an average price to earnings ratio of 20%. The DPR value is about 30%. That is, the concern has all the opportunities to increase its dividend payments in the future.

Market situation

Last year, the corporation released a report stating that sales increased by 20%. This size of the indicator is significant. The growth was affected by the coronavirus pandemic, as consumers preferred to shop in mass markets with a large offer of promotions and discounts.

Interestingly, Target's sales grew by an order of magnitude stronger when compared with such competing companies as Walmart and Costco. This is due to the issuer's investments in the customer service sector, namely in express delivery of products, the supply chain, as well as the expansion of the range of brands. As a result, the issuer attracted new buyers during the pandemic.

Since the corporation invested in growth, it managed to increase its margin and increase user confidence. In addition, the issuer is constantly opening new outlets, as a result of which the coverage of potential customers becomes wider, there are new points that are responsible for the delivery of products.

Target is an excellent example of a retail retailer that has a large selection of products and a high market coverage. Thanks to these factors, the corporation's leadership position has become even stronger after the outbreak of the pandemic, although most issuers are still experiencing difficulties against the background of the coronavirus.

Reasons to purchase Target Securities

In 2020, the director of the concern said that the retailer had established a multi-channel business. According to the results of last year, about 12 million consumers bought goods on the website, through the app and in traditional retail chains. Revenue from its own brand amounted to $1 billion. It is worth noting that many customers use the company's services because they prefer Target brand products.

Another factor that the company is called profitable for investment is the increase in proceeds from sales. Revenue increased by 2 times in the first three months of the year. This happened even despite the vaccination. The issuer is going to invest $4 billion in its business every 12 months to expand the list of products, reconstruct stores and improve delivery efficiency.

Analysts believe that this financial instrument is "a must-buy". The corporation is characterized by stable reporting and growth prospects. If you look at the price chart, you can see that the shares are in an ascending zone during the year. By the end of August, the quotes reached the level of $267, according to forecasts, the paper will move further without obstacles. The target level of the bulls is the area of $290-300.

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