TGT vs. WMT: A Widening Valuation Gap
How four core metrics reveal a sharply diverging picture between the two retailers.
This free section covers the factual valuation gap between Walmart and Target using four key metrics. The paid section explains how investors think about momentum, mean reversion, and why takeover speculation sometimes appears at extreme valuation lows.
Over the past year, the valuation spread between Target and Walmart has widened dramatically, reflecting diverging market sentiment, fundamentals, and expectations for the two retailers. Looking at four core metrics—market cap, trailing P/E, forward P/E, and price-to-sales—the contrast today is far sharper than it was in late 2024.
Current Snapshot
Market Cap: Walmart now sits at 917 billion dollars, while Target has fallen to 42 billion dollars, a gap of 876 billion.
Trailing P/E: Walmart trades at 40 times earnings, compared to Target at 11 times, giving Walmart a multiple roughly 3.6 times higher.
Forward P/E: Forward valuations show a similar spread, 34 times earnings for Walmart versus 11 times for Target, a 3x premium.
Price/Sales: Walmart’s 1.32x revenue multiple stands more than three times above Target’s 0.40x.
Across every valuation measure, Walmart commands a premium multiple while Target trades near recession-level ratios despite stabilizing operations.
How the Gap Has Changed Since October 2024
The direction of change tells an even clearer story than the levels:
Market Cap: Target has shed 27 billion dollars in value while Walmart has added 259 billion, creating a performance spread of roughly 286 billion.
Trailing P/E: Both companies saw some compression, but Target’s drop was larger, 4.3 turns versus 2.4 for Walmart.
Forward P/E: This is where the divergence is most dramatic. Target’s forward multiple fell by 3.3 turns while Walmart’s rose nearly 4 turns, a seven-point swing.
Price/Sales: Target’s price-to-sales ratio contracted by 0.25 while Walmart’s expanded by 0.32, widening the spread by about 0.57.
The valuation gap didn’t just exist; it expanded, with Walmart re-rating higher while Target de-rated lower across almost every metric.
Summary Insight: Two Retailers, Two Narratives
The market has effectively priced Walmart as a secular compounder benefiting from scale, omnichannel dominance, and accelerating earnings momentum. Target, by contrast, is priced like a company facing margin pressure, inconsistent traffic trends, and uncertain earnings recovery.
Walmart is experiencing multiple expansion, market-cap acceleration, and sustained investor enthusiasm.
Target is undergoing multiple compression and market-cap erosion despite improving execution.
The result is the largest valuation divergence between the two companies in years, and one that continues to widen.
Premium Section: How Investors Think About Momentum, Mean Reversion, and Why Takeover Speculation Sometimes Emerges
Note: This is not investment advice. This section outlines analytical frameworks investors commonly use, plus a factual summary of recent media speculation.
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