Will Target’s Growth Continue?
Target (NYSE: TGT) is experiencing enormous growth. For example, Target’s year-to-year digital sales grew by 118% between the first quarter of 2020 and the first quarter of 2021.
Insider Intelligence estimates Target’s curbside pickup orders grew by 212% in fiscal 2020. Similarly, the volume of merchandise moved by Target’s subsidiary Shipt grew by 500% between the first quarter of 2020 and the first quarter of 2021.
Online sales comprised 17.9% of Target’s total sales in 2020, Statista estimates. In 2019, Statista estimates that Target was the seventh largest US online retailer with digital sales of $6.613 billion.
Target’s e-commerce sales grew to $20.23 billion in 2020, eMarketer estimates. Target (TGT) was the sixth largest online retailer in 2020.
Target’s Incredible Growth
Consequently, Target’s quarterly revenues grew from $19.615 billion on 30 April 2020 to $24.197 billion on 30 April 2021. Moreover, Target Corp. (NYSE: TGT) experienced four straight quarters of quarterly revenue growth.
Stockrow estimates that Target’s revenues grew by 24.72% in the quarter ending on 31 July 2020, 21.25% in the quarter ending on 31 October 2020, 21.12% in the quarter ending on 31 January 2021, and 23.26% in the quarter ending on 30 April 2020.
As a result, Target’s quarterly gross profit grew from $4.528 billion on 30 April 2020 to $7.099 billion on 30 April 2021. Similarly, the quarterly operating income rose from $468 million to $2.374 billion in the same period.
Conversely, the quarterly operating cash flow rose slightly from $1.284 billion on 30 April 2020 to $1.139 billion on 30 April 2021. Impressively, the quarterly ending cash flow rose from $4.566 billion on 30 April 2020 to $7.816 billion on 30 April 2021.
Finally, the cash and short-term investments rose from $4.566 billion on 30 April 2020 to $7.816 billion on 30 April 2021. Finally, the Total Assets grew from $44.806 billion on 30 April 2020 to $50.471 billion on 30 April 2021.
Is Target the Perfect Growth Stock?
Hence, Target added enormous value in 2020. Notably, Target added $3.25 billion in cash and short-term investments and $5.665 billion in total assets in a pandemic.
Hence, I think Mr. Market fairly priced Target (TGT) at $230.53 on 18 June 2021. Target’s share price grew from $119.21 on 16 June 2020.
Thus, Target could be the perfect growth stock because its cash, revenues, gross profit, and share price are growing. In addition, Target’s retail sales are growing at a high speed.
Therefore, Target is a brick and mortar retailer with a high level of growth and a large margin of safety. However, many people will wonder if Target can maintain that growth.
The numbers show Target may not maintain its growth. Notably, Target’s revenues only grew by 1.83% in the quarter ending on 31 January 2020, the last full quarter before coronavirus came to America, Stockrow estimates.
Target’s Growth will continue
Therefore, the pandemic drove Target’s growth. I think Target’s growth will continue but it will be smaller. I predict 1% to 2% growth at Target in the future.
On the other hand, Target (TGT) can grow without accumulating debt. Notably, Target reported a negative financing cash of -$1.669 billion on 30 April 2021. In contrast, Target reported a financing cash flow of $1.449 billion on 30 April 2020.
Overall, Target’s Total debt fell from $16.689 billion on 30 April 2020 to $15.245 billion on 30 April 2021. Target’s growth is healthy because the company is paying its debts.
Target’s Growing Dividend
Investors need to consider Target because its dividend is growing. For instance, Target’s quarterly dividend will grow from 68¢ on 10 June 2021 to 90¢ on 10 September 2021.
Thus, Target’s dividend will grow by 12¢ this summer. In contrast, Target’s dividend grew by 2¢ in 2020. Target paid a 66¢ quarterly dividend on 10 June 2020 and a 68¢ quarterly dividend on 10 September 2020. Overall, Target offered a $3.60 annualized dividend and a 1.55% dividend yield on 15 June 2021.
I consider Target (NYSE: TGT) a terrific growth stock because its dividend grows. I think all investors who like growth need to examine Target.