Target (TGT 0.25%) has had a pretty big fall over the past few years. It has struggled in multiple ways, and its stock continues to dive. You might be interested in buying Target stock at this low price -- it trades at a price-to-earnings ratio of less than 11. Read this first to see if that's a good idea.
What's happening at Target
Target has been dealing with several issues over the past few years, but of late, it's struggling as its core customers cut back on discretionary spending. Inflation is still high, and Target's a discount retailer; its clientele is saving for essentials, while Target's primary segments are housewares, apparel, and other products that aren't milk and bread.
Sales have been declining for a while, and that doesn't seem to be finished. Revenue was down 1.5% in the 2025 fiscal third quarter (ended Aug. 2), while comparable sales were down 2.7%. This is trickling down to the bottom line, and earnings per share (EPS) were down from $1.85 last year to $1.51 this year.
There have been some bright moments. Digital sales to continue to shine despite the grim environment, and digital comps were up 2.4%, driven by a 35% increase in same-day options from Target's membership program.
Image source: Target.
Target vs. the competition
As a discount retailer, Target's main competition is Walmart and Costco Wholesale. Both of those companies are focused on grocery, which gives them a leg up right now, and they've both been performing far better than Target. In their most recent quarters, Walmart's comparable sales increased 4.5% year over year, while Costco's were up 5.7%.
Off-price retail chain TJX Companies is also doing well right now, with sales up 5% year over year.
How Target stock is performing
Target stock has been crushed over the past few years. It's lost half of its value over the past five years, including all of its gains from the pandemic, while the S&P 500 index has soared over the same time.
The company is in the process of a CEO switch, with the new CEO, Michael Fiddelke, set to take over in January. While it looks like Fiddelke, who's a company veteran, has some new ideas, the company is still facing economic headwinds.
NYSE: TGT
Key Data Points
One thing in its favor is that Target is a Dividend King, and it's raised its dividend annually for the past 54 years. At the current price, Target's dividend yields 5%.
Target has struggled before this and has always made a strong recovery. There's plenty of uncertainty, though, and considering the broader climate, the stock may continue to go sideways until the economy improves.
What should investors do? Dividend investors can feel comfortable buying now and locking in the excellent yield. Target is reliable for dividend growth and payments.
As for the stock price, it could head higher as soon as there's improvement. But I would still caution to wait for some progress, even if you miss buying at the low.
