Wal-Mart Stores, Inc. (WMT), Target Corporation (TGT): Are There Any Deals in Big Retail?

All of these issues are driving shares lower, but the long-term picture is relatively unchanged. Wal-Mart Stores, Inc. (NYSE:WMT) earned $5.02 per share last year, putting the current stock price at about 14.6 times earnings. The stock has run up considerably since 2011, but for a long-term investor Wal-mart offers a reasonable price. It’s certainly no bargain, but it’s not overpriced either.

Target Corporation (NYSE:TGT)’s stock has fallen even further than Wal-Mart Stores, Inc. (NYSE:WMT)’s, even though the company reported a comparable-store sales increase of 1.2%. Target faces many of the same short-term problems faced by Wal-Mart, and an aggressive expansion into Canada also suppressed profits. Target opened 44 Canadian stores in the quarter, bringing the total up to 68, with a year-end goal of 124. Earnings-per-share for the quarter fell by 10% year-over-year, causing many focused on the short-term to sell.

The share price drop erases most of the gains achieved this year, with the stock now trading at 14.1 times last year’s earnings. Earnings may decline this year, but the long-term picture is largely unchanged. Target Corporation (NYSE:TGT) isn’t nearly as big as Wal-Mart Stores, Inc. (NYSE:WMT), and the expansion into Canada will eventually pay off.

The bottom line
With good news and strong results, shares of Costco have become expensive. Buying the shares at the current price will likely lead to at best average returns. Wal-Mart Stores, Inc. (NYSE:WMT) and Target Corporation (NYSE:TGT), both facing short-term issues, look more attractive as the long-term picture is being clouded by the short-term picture.

Target Corporation (NYSE:TGT) looks like the best buy of the three, with the stock being severely punished for a costly expansion which will eventually pay off. The best time to buy a stock is when short-term issues cause an overreaction, and this seems to be the case with Target.

The article Are There Any Deals in Big Retail? originally appeared on Fool.com.

Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Costco Wholesale. The Motley Fool owns shares of Costco Wholesale. 

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