Objective: The goal of this exercise is to assess the candidate's financial modeling and acc

completion of the worksheet, the candidate will have a follow up discussion to share their
knowledge of the company being modeled is expected. No additional research is required
materials and information. This case study is part of our assessment process but not the so

Excel sheet: Please complete the following over the given 3.5 hour time allotment:
1. Project out the three financial statements (Income Statement, Cash Flow Statement, an
2027 using the historical data and "Key company information" provided. Adding additiona
spreadsheet to show various modeling assumptions is encouraged.

2. Update the "Valuation and Metrics" section of the model for both the historical and for

3. Please answer the questions in the 'Write-up' tab and write as if you are communicating
financial modeling and accounting experience. Upon
p discussion to share their approach. No prior
tional research is required beyond the attached
ment process but not the sole screening tool.

our time allotment:

t, Cash Flow Statement, and Balance Sheet) through
provided. Adding additional rows anywhere in the
ed.

both the historical and forecast periods.

s if you are communicating formally to an investor.

General Info 2012 2013 2014 2015 2016
Ticker TGT
Company Target Suggested time allocation
Company Headquarters Minneapolis 1. 20 mins to read and incoporate prompt from 'Key Com
Financial Reporting U.S. GAAP 2. 2 hours 20 mins for completing model below
Reporting Currency U.S. Dollar 3. 50 mins for written portion (see "Write-up" tab)
Share Price Currency U.S. Dollar
Period FY Disclaimer: Note that some of numbers were modified for the
Last Calendar Year
Last Fiscal Year 1/1/24
Current Price Please update to latest price

2012 2013 2014 2015 2016

1/31/13 1/31/14 1/31/15 1/31/16 1/31/17
Key Revenue Drivers
Please reconcile this data with revenue (row 31) and use as basis for forecast. Add rows as necessary.
Avg # of retail stores 1,771 1,786 1,792 1,791 1,797

Avg sales per store 41 40 41 41 39

Total retail sales (USD mn) 71,959 71,279 72,619 73,717 69,415
Other sales (USD mn) 0 0 0 777 857

-1.8% 1.5% 1.5% -6.2%

10.3%

Please build out P&L statement first before breaking down key revenue drivers above
Income Statement

Revenue 71,959 71,279 72,619 74,494 70,272

COGS 50,567 50,039 51,507 52,242 49,146
Gross Profit 21,392 21,240 21,112 22,252 21,126
30% 30% 29% 30% 30%
R&D 0 0 0 0 0
SG&A 13,760 14,074 14,676 15,155 14,222
D&A 2,043 1,996 1,901 1,968 2,045
Operating Income 5,589 5,170 4,535 5,129 4,859
SG&A as % of revenue 19% 20% 20% 20% 20%
D&A % of Revenue 3% 3% 3% 3% 3%
Net Interest Expense (Income) 764 1,049 882 606 569
7% 7% 5% 4%
Other Expense (Income) 0 0 0 0 0
Income Before Taxes (Excl Unusual Items) 4,825 4,121 3,653 4,523 4,290

Restructuring Charges 0 0 0 0 0
Impairment of Goodwill 0 0 0 0 0
Gain (Loss) on Sale of Investment 0 0 0 0 0
Other Unusual Expenses (Income) 0 0 0 (651) (88)
Income Before Taxes Incl Unusual Items 4,825 4,121 3,653 5,174 4,378

Income Tax Expense 1,744 1,427 1,204 2,204 1,471

Earnings from Continuing Operations 3,081 2,694 2,449 2,970 2,907
 36% 35% 33% 43% 34%
Earnings of Discontinued Ops. 0 0 0 0 0
Other Extraordinary Expenses (Income) 0 0 0 0 0
Net Income to Company 3,081 2,694 2,449 2,970 2,907

Minority Interest in Earnings 0 0 0 0 0

Net Income 3,081 2,694 2,449 2,970 2,907

Pref. Dividends and Other Adj. 0 0 0 0 0

Net Income to Common 3,081 2,694 2,449 2,970 2,907

EPS 4.64 4.20 3.83 4.69 4.99

Weighted Avg. Diluted Shares Out. 663 642 640 633 582

Dividends per Share 1.31 1.57 1.88 2.15 2.32

19.7% 20.0% 14.4% 7.5%
Valuation and Metrics
Share Price 59 63 76 73 72
Market Cap 39,249 40,604 48,586 45,953 42,072
Total Debt 17,648 13,261 12,899 12,913 12,591
Cash 784 695 2,210 4,046 2,512
Minority Interest 0 0 0 0 0
Enterprise Value (EV) 56,113 53,170 59,275 54,820 52,151
Invested Capital (IC) 33,422 28,797 24,686 21,824 20,994
Free Cash Flow (FCF) 2,048 4,634 2,653 4,406 3,889
EV / Sales 0.8x 0.7x 0.8x 0.7x 0.7x
EV / EBITDA 7.4x 7.4x 9.2x 7.1x 7.5x
EV / IC 1.7x 1.8x 2.4x 2.5x 2.5x
P/E 12.7x 15.1x 19.8x 15.5x 14.5x
Price / Book Value 2.4x 2.5x 3.5x 3.5x 3.9x
FCF Yield 5.2% 11.4% 5.5% 9.6% 9.2%
Dividend Yield 2.2% 2.5% 2.5% 3.0% 3.2%
Return on Avg Equity (ROE) 18.6% 16.6% 17.5% 22.9% 26.6%
Return on Avg Invested Capital (ROIC) 10.7% 11.7% 12.3% 15.2% 15.6%
Interest Coverage (EBIT / Net Interest) 7.3x 4.9x 5.1x 9.5x 8.7x
Net Debt / EBITDA 2.2x 1.8x 1.7x 1.1x 1.4x
Debt / IC 0.5x 0.5x 0.5x 0.6x 0.6x
Debt / Equity 1.1x 0.8x 0.9x 1.0x 1.2x
Revenue Growth -0.9% 1.9% 2.6% -5.7%
3 Year Revenue CAGR 1.2% -0.5%
Gross Margin 29.7% 29.8% 29.1% 29.9% 30.1%
EBIT Margin 7.8% 7.3% 6.2% 7.8% 7.0%
FCF Margin 2.8% 6.5% 3.7% 5.9% 5.5%
Capex as % of Sales 4.6% 2.6% 2.5% 1.9% 2.2%

Cash Flow Statement

Net Income 2,999 1,971 (1,636) 3,363 2,669

Depreciation & Amortization 2,142 1,996 2,129 2,213 2,298
Stock Based Comp 0 0 0 0 0
Change in Net Working Capital 34 2,498 (542) 1,149 (107)
Other 150 55 4,488 (881) 576
Cash from Operations 5,325 6,520 4,439 5,844 5,436
5% 3% 2% 2% 2%
Capital Expenditure (3,277) (1,886) (1,786) (1,438) (1,547)
Cash Acquisitions 0 (157) (20) 0 0
Other 422 1,772 (120) 1,946 74
Cash from Investing (2,855) (271) (1,926) 508 (1,473)

Total Debt Issued (Repaid) 442 (3,463) (86) (85) (664)

Issuance of Common Stock 0 0 0 0 0
Repurchase of Common Stock (1,875) (1,461) 0 (3,438) (3,706)
Total Dividends Paid (869) (1,006) (1,205) (1,362) (1,348)
Other (186) (434) 293 369 221
Cash from Financing (2,488) (6,364) (998) (4,516) (5,497)

Foreign Exchange Rate Adjustments 8 26 0 0 0

Misc. Cash Flow Adjustments 0 0 0 0 0
Net Change in Cash (10) (89) 1,515 1,836 (1,534)

Balance Sheet

Cash & Equivalents 784 695 2,210 4,046 2,512

Short Term Investments 0 0 0 0 0
Accounts Receivable 5,841 0 0 0 0
Inventory 7,903 8,278 8,790 8,601 8,253
Prepaid Expenses 0 0 0 0 0
Other Current Assets 1,860 2,600 3,075 1,483 1,202
Total Current Assets 16,388 11,573 14,075 14,130 11,967

Net Property Plant And Equipment 30,653 26,412 25,958 25,217 24,242
Goodwill 0 0 0 0 0
Operating lease assets 0 0 0 0 1,808
Other Long Term Assets 1,122 6,568 1,371 915 707
Total Long Term Assets 31,775 32,980 27,329 26,132 26,757

Total Assets 48,163 44,553 41,404 40,262 38,724

Accounts Payable 7,056 7,335 7,759 7,418 7,252

Accrued Expenses 3,981 3,610 3,783 4,236 3,559
Current Portion of Long Term Debt 2,994 1,832 194 968 1,729
Other Current Liabilities 0 0 0 0 0
Total Current Liabilities 14,031 12,777 11,736 12,622 12,540

Long Term Debt 14,654 11,429 12,705 11,945 10,862

Noncurrent operating lease liabilities 1,861
Deferred income taxes 1,311 1,349 1,321 823 836
Other Long Term Liabilities 1,609 2,767 1,645 1,915 1,710
Total Liabilities 31,605 28,322 27,407 27,305 27,809

Total Preferred Equity 0 0 0 0 0

Total Common Equity 16,558 16,231 13,997 12,957 10,915
Total Minority Interest 0 0 0 0 0
Total Equity 16,558 16,231 13,997 12,957 10,915
Total Liabilities And Equity 48,163 44,553 41,404 40,262 38,724

53.5 55.0 51.8 53.9

 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

ate prompt from 'Key Company Information' tab. Please use this information to build out forecasts
ing model below
see "Write-up" tab)

mbers were modified for the case study

Forecast
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
1/31/18 1/31/19 1/31/20 1/31/21 1/31/22 1/31/23 1/1/24 1/31/25 1/31/26 1/31/27
Forecast
d rows as necessary.
1,812 1,833 1,856 1,883 1,912 1,937 1,952 1,967 1,982 1,997

40 41 42 49 55 56 54 54 55 56

71,786 74,432 77,131 92,400 104,611 107,588 105,803 106,124 108,537 110,999
928 923 981 1,161 1,394 1,532 1,609 1,690 1,775 1,864

2.6% 2.5% 2.3% 18.1% 11.5% 1.5% -2.4%

8.3% -0.5% 6.3% 18.3% 20.1% 9.9% 5.0%

Forecast

72,714 75,355 78,112 93,561 106,005 109,120 107,412 107,814 110,312 112,863
51,125 53,299 54,864 66,177 74,963 78,600 77,736 77,488 78,732 79,988
21,589 22,056 23,248 27,384 31,042 30,520 29,676 30,326 31,580 32,875
30% 29% 30% 29% 29% 28% 28% 28% 29% 29%
0 0 0 0 0 0 0 0 0 0
15,140 15,723 16,199 18,567 19,762 20,658 21,554 21,850 22,577 23,325
2,225 2,223 2,357 2,230 2,344 2,385 2,415 2,422 2,477 2,534
4,224 4,110 4,692 6,587 8,936 7,477 5,707 6,054 6,526 7,016
21% 21% 21% 20% 19% 19% 20% 20% 20% 21%
3% 3% 3% 2% 2% 2% 2% 2% 2% 2%
530 461 464 465 421 478 502 493 477 461
4% 4% 4% 4% 3% 3% 3% 3% 3% 3%
0 0 0 0 0 0 0 0 0 0
3,694 3,649 4,228 6,122 8,515 6,999 5,205 5,561 6,049 6,555

0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
(59) (27) 5 16 (76) (63) (92) 0 0 0
3,753 3,676 4,223 6,106 8,591 7,062 5,297 5,561 6,049 6,555

1,175 799 930 1,347 1,905 1,554 1,159 1,217 1,323 1,434
2,578 2,877 3,293 4,759 6,686 5,508 4,138 4,344 4,725 5,121
 31% 22% 22% 22% 22% 22% 22% 22% 22% 22%
0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
2,578 2,877 3,293 4,759 6,686 5,508 4,138 4,344 4,725 5,121

0 0 0 0 0 0 0 0 0 0
2,578 2,877 3,293 4,759 6,686 5,508 4,138 4,344 4,725 5,121

0 0 0 0 0 0 0 0 0 0
2,578 2,877 3,293 4,759 6,686 5,508 4,138 4,344 4,725 5,121

4.69 5.40 6.39 9.42 13.57 11.85 8.94 9.39 10.21 11.06

550 533 516 505 493 465 463 463 463 463

2.43 2.50 2.58 2.66 3.15 3.96 4.38 4.85 5.37 5.94
5.0% 3.0% 3.0% 3.0% 18.5% 25.7% 10.7% 10.7% 10.7% 10.7%

65 66 128 177 231 149 151 150 150 150

35,902 35,239 66,102 89,218 114,030 69,259 69,883 69,415 69,415 69,415
11,398 11,275 11,499 12,680 13,720 16,139 16,038 15,538 15,038 14,538
2,643 1,556 2,577 8,511 5,911 2,229 3,805 4,154 4,700 4,250
0 0 0 0 0 0 0 0 0 0
44,657 44,958 75,024 93,387 121,839 83,169 82,116 80,800 79,754 79,703
20,406 21,016 20,755 18,609 20,636 25,142 25,665 26,917 28,112 30,432
4,390 2,457 4,090 7,876 5,081 3,346 3,815 3,092 3,530 2,800
0.6x 0.6x 1.0x 1.0x 1.1x 0.8x 0.8x 0.7x 0.7x 0.7x
6.9x 7.1x 10.7x 10.6x 10.7x 8.4x 10.0x 9.5x 8.9x 8.3x
2.2x 2.1x 3.6x 5.0x 5.9x 3.3x 3.2x 3.0x 2.8x 2.6x
13.9x 12.2x 20.1x 18.7x 17.1x 12.6x 16.9x 16.0x 14.7x 13.6x
3.1x 3.1x 5.6x 6.2x 8.9x 6.2x 5.2x 4.5x 3.9x 3.4x
12.2% 7.0% 6.2% 8.8% 4.5% 4.8% 5.5% 4.5% 5.1% 4.0%
3.7% 3.8% 2.0% 1.5% 1.4% 2.7% 2.9% 3.2% 3.6% 4.0%
22.1% 25.5% 27.8% 33.0% 52.1% 49.0% 30.8% 28.0% 26.6% 25.4%
14.4% 15.4% 17.6% 27.5% 34.0% 23.4% 17.7% 17.6% 18.1% 18.0%
8.1x 9.0x 10.1x 14.1x 21.4x 15.8x 11.6x 12.3x 13.7x 15.2x
1.3x 1.5x 1.3x 0.5x 0.7x 1.4x 1.5x 1.3x 1.1x 1.1x
0.6x 0.5x 0.6x 0.7x 0.7x 0.6x 0.6x 0.6x 0.5x 0.5x
1.0x 1.0x 1.0x 0.9x 1.1x 1.4x 1.2x 1.0x 0.8x 0.7x
3.5% 3.6% 3.7% 19.8% 13.3% 2.9% -1.6% 0.4% 2.3% 2.3%
0.0% 0.4% 3.6% 8.8% 12.0% 11.8% 4.7% 0.6% 0.4% 1.7%
29.7% 29.3% 29.8% 29.3% 29.3% 28.0% 27.6% 28.1% 28.6% 29.1%
5.9% 5.5% 6.0% 7.0% 8.5% 6.9% 5.4% 5.6% 5.9% 6.2%
6.0% 3.3% 5.2% 8.4% 4.8% 3.1% 3.6% 2.9% 3.2% 2.5%
3.5% 4.7% 3.9% 2.8% 3.3% 3.1% 4.5% 4.5% 4.5% 4.5%

2,928 2,930 3,269 4,368 6,946 5,508 4,138 4,344 4,725 5,121
2,445 2,474 2,604 2,485 2,642 2,700 2,801 2,422 2,477 2,534
0 0 0 0 0 0 0 0 0 0
1,315 20 880 3,058 (1,445) (2,436) 1,039 1150 1263 196
235 549 364 614 482 974 643 0 0 0
 6,923 5,973 7,117 10,525 8,625 6,746 8,621 7,916 8,466 7,850
3% 5% 4% 3% 3% 3% 4% 4% 4% 4%
(2,533) (3,516) (3,027) (2,649) (3,544) (3,400) (4,806) (4,824) (4,936) (5,050)
(518) 0 0 0 0 (1,200) 0 0 0 0
(24) 100 83 58 390 (1,200) 2 0 0 0
(3,075) (3,416) (2,944) (2,591) (3,154) (5,800) (4,804) (4,824) (4,936) (5,050)

(1,441) (281) (330) 65 825 2,462 (147) (500) (500) (500)

0 0 0 0 0 0 0 0 0 0
(1,046) (2,124) (1,565) (745) (7,356) (2,826) 0 0 0 0
(1,338) (1,335) (1,330) (1,343) (1,548) (1,836) (2,011) -2244 -2484 -2750
108 96 73 23 8 (2,428) (83) 0 0 0
(3,717) (3,644) (3,152) (2,000) (8,071) (4,628) (2,241) (2,744) (2,984) (3,250)

0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
131 (1,087) 1,021 5,934 (2,600) (3,682) 1,576 349 546 (450)

2,643 1,556 2,577 8,511 5,911 2,229 3,805 4,154 4,700 4,250
0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
8,597 9,497 8,992 10,653 13,902 13,499 11,886 10697.4 9627.66 9627.66
0 0 0 0 0 0 0 0 0 0
1,300 1,466 1,333 1,592 1,760 2,118 1,807 1,807 1,807 1,807
12,540 12,519 12,902 20,756 21,573 17,846 17,498 16,658 16,135 15,685

24,536 25,533 26,283 26,879 28,181 31,512 33,096 35,498 37,956 40,472
0 0 0 0 0 0 0 0 0 0
1,884 1,965 2,236 2,227 2,556 2,657 3,362 3,362 3,362 3,362
1,343 1,273 1,358 1,386 1,501 1,320 1,400 1,400 1,400 1,400
27,763 28,771 29,877 30,492 32,238 35,489 37,858 40,260 42,718 45,234

40,303 41,290 42,779 51,248 53,811 53,335 55,356 56,918 58,853 60,919

8,677 9,761 9,920 12,859 15,478 13,487 12,098 12,059 12,253 12,448
4,094 4,201 4,406 6,122 6,098 5,883 6,090 6,090 6,090 6,090
281 1,052 161 1,144 171 130 1,116 1,116 1,116 1,116
0 0 0 0 0 0 0 0 0 0
13,052 15,014 14,487 20,125 21,747 19,500 19,304 19,265 19,459 19,654

11,117 10,223 11,338 11,536 13,549 16,009 14,922 14,422 13,922 13,422
1,924 2,004 2,275 2,218 2,493 2,638 3,279 3,279 3,279 3,279
693 972 1,122 990 1,566 2,196 2,480 2,480 2,480 2,480
1,866 1,780 1,724 1,939 1,629 1,760 1,939 1,939 1,939 1,939
28,652 29,993 30,946 36,808 40,984 42,103 41,924 41,385 41,079 40,774

0 0 0 0 0 0 0 0 0 0
11,651 11,297 11,833 14,440 12,827 11,232 13,432 15,532 17,774 20,145
0 0 0 0 0 0 0 0 0 0
11,651 11,297 11,833 14,440 12,827 11,232 13,432 15,532 17,774 20,145
40,303 41,290 42,779 51,248 53,811 53,335 55,356 56,918 58,853 60,919

61.9 66.8 66.0 70.9 75.4 62.6 56.8 56.8 56.8 56.8

TRUE TRUE TRUE

 2027

Optional
'17-'20 '21-'24 '24-'27 Comments
2027 CAGR CAGR CAGR
1/31/28 1/31/29 1/31/30 1/31/31

2,012 1% 1% 1% take average of the guided annual store growth

56 7% 0% 1% Assume 2024 inflation still has some impact on sale growth, but will recover to a m

113,510 9% 0% 2%
1,958 8% 7% 5%

115,468
81,257
34,211
30% Online sale gross profit margin is ~30% and total online sale is ~20%, based on 20
0
24,094
2,591
7,526
21% SG&A as % of revenue will grow as the company is committed to investing in comp
2%
446
3%
0
7,080

0
0
0
0
7,080

1,549
5,531
 22%
0
0
5,531

0
5,531

0
5,531

11.95

463

6.58
10.7%

150 Use current price for forecast period calculations

69,415
14,038
3,859
0
79,594 Make sure to use formulas so we can see each element of EV
32,811
3,153
0.7x
7.9x
2.4x
12.6x
3.1x
4.5%
4.4%
24.4%
17.9%
16.9x
1.0x
0.4x
0.6x
2.3%
2.3%
29.6%
6.5%
2.7%
4.5%

5,531
2,591
0
197
0
 8,319
4% model capex based on % of sales
(5,166)
0
0
(5,166)

(500)
0
0
-3044
0
(3,544)

0
0
(391)

3,859
0
0
9627.66
0
1,807
15,294

43,048
0
3,362
1,400
47,810

63,104

12,646
6,090
1,116
0
19,852

12,922 the company wants to reduce leverage

3,279
2,480
1,939
40,472

0
22,632
0
22,632
63,104

56.8

TRUE
ale growth, but will recover to a more normal 1.5% growth

online sale is ~20%, based on 2023 gross margin of 28%, this implies brick and mortar gross margin is close to 27.5%

is committed to investing in competitive wages and benefits

lement of EV
Key Company Information
Please use the following information about the company to help with your forecast, where ap
This is the exact same information as the "Key Company Information" tab.

Topline
Mgmt expects to open 20-25 stores per annum in the next few years with focus on higher eff
High inflation has impacted avg ticket growth over the last 12 months, but should see a smal

Margins
Company online sales has grown faster than its brick and mortar business, with online sales

The company is committed to investing in competitive wages and benefits

Balance sheet/cash flow

The company wants to reduce gearing (debt to equity) and is committed to shareholder retur
The company announced an initiative to reduce its inventory days by 10% over the next 2 ye

Others
Management guided to a 2%, 6%, 6%, 5% topline growth for CY 2016, 2017, 2018, and 201
elp with your forecast, where appropriate.
ny Information" tab.

w years with focus on higher efficiency

2 months, but should see a smaller impact going forward

ortar business, with online sales GPM at ~30% and EBIT margin at 2-3%. Online sales is now close to 20% of total sales.

s and benefits

s committed to shareholder returns

days by 10% over the next 2 years

CY 2016, 2017, 2018, and 2019 at the beginning of the respective years.
Key company information (suggested time: 20 mins to read and incorporate this)
Please use the following information about the company to help with your forecast, where appropriate

Topline
Mgmt expects to open 20-25 stores per annum in the next few years with focus on higher efficiency
High inflation has impacted avg ticket growth over the last 12 months, but should see a smaller impact going forward

Margins
Company online sales has grown faster than its brick and mortar business, with online sales GPM at ~30% and EBIT margin at 2-3%.
The company is committed to investing in competitive wages and benefits

Balance sheet/cash flow

The company wants to reduce gearing (debt to equity) and is committed to shareholder returns
The company announced an initiative to reduce its inventory by 10% over the next 2 years

Others
Management guided to a 2%, 6%, 6%, 5% topline growth for CY 2016, 2017, 2018, and 2019 at the beginning of the respective years.
and EBIT margin at 2-3%. Online sales is now close to 20% of total sales.

ng of the respective years.

Please write as if you are communicating formally to an investor.

Write-up (suggested time: 50 mins)

1. Explain your forecast of future revenue, cost, and margins. What information was most helpful for you in making your forecasts

2. How would you approach valuing this company? Please discuss the methodology(ies) you would use and why.

3. Would you invest in Target at its current share price? Why or why not? Please discuss your key considerations. (Note: No need

Optional: a. Calculate the IRR for an investment at the Current Price assuming an exit date of 1/31/2027 (end of Fiscal Year 202

b. Include a sensitivity table that calculates the IRR based on various terminal exit multiples vs. various investment entry prices.

1, revenue forecast is based on my forecast on average sale per store and average number of retail sale. For the
assume sales per store will still be impacted by inflation, but to a less extent compared to 2023. For the outer ye
assume a 1.5% annual growth rate for sales per store.

For gross margin, I assume gross margin rate will increase by 0.5% per year driven by the company's online sale g
which has higher margin.

My COGS forecast is the result of Revenue - gross margin.

Management's guidance and commentary on margin trends are valuable. However, I am modeling only
additional stores per year (instead of the guided range of 20-25), based on the observation that manag
historical guidance has often been overly optimistic.

2, To value this company, I would use two different appraochs

Intrinsic value approach:
DCF:
- This method estimates the intrinsic value of the company based on its expected future cash flows, adj
the time value of money.
How to do it:
Project free cash flows for the next 5-10 years based on historical performance and growth assumption
Estimate a terminal value using an appropriate growth rate.
Discount the cash flows and terminal value back to present value using Target’s Weighted Average Cost
(WACC).
Relative approach:

-This method allows for relative valuation by comparing Target to similar companies in the retail sector,
a market perspective on valuation.
How to do it:
Identify peer companies (e.g., Walmart, Costco) and calculate key multiples such as EV/EBITDA or P/E
Apply the average or median multiples from peers to Target’s financial metrics to derive a valuation ran

3,

I would consider buying TGT at the current price of approximately $150 per share. The company is expe
experience decent top-line growth over the next few years, driven by the addition of retail stores and a
in online sales. Additionally, gross margins are likely to improve gradually as online sales, which typicall
higher margins, continue to grow at a faster pace. This trend will result in consistent low single-digit gro
gross profit.
3,

I would consider buying TGT at the current price of approximately $150 per share. The company is expe
experience decent top-line growth over the next few years, driven by the addition of retail stores and a
in online sales. Additionally, gross margins are likely to improve gradually as online sales, which typicall
higher margins, continue to grow at a faster pace. This trend will result in consistent low single-digit gro
gross profit.
As inflation concerns ease, same-store sales could also improve. From a valuation perspective, based on
estimates, the company is trading at 9.5x EV/EBITDA and 0.7x EV/Sales, both of which are below the av
the past five years. Even when excluding the COVID period, Target's current valuation is in line with the
period. However, based on my projections, revenue growth over the next few years is expected to exce
growth experienced during 2014-2018.
 l for you in making your forecasts?

ould use and why.

ey considerations. (Note: No need to use outside information other than the prompts above and information in this case study)

1/31/2027 (end of Fiscal Year 2026) and your choice of a terminal exit multiple on a 12-month forward metric (i.e., Fiscal Year 2027 metric).

s. various investment entry prices. You can include this analysis in the 'Test' tab or in the space below.

number of retail sale. For the near-term, I

ared to 2023. For the outer years, I

by the company's online sale growth,

owever, I am modeling only 15

the observation that management's

ected future cash flows, adjusted for

nce and growth assumptions.

et’s Weighted Average Cost of Capital

mpanies in the retail sector, providing

such as EV/EBITDA or P/E

ics to derive a valuation range.

share. The company is expected to

ddition of retail stores and an increase
online sales, which typically carry
onsistent low single-digit growth in
 share. The company is expected to
ddition of retail stores and an increase
online sales, which typically carry
onsistent low single-digit growth in
uation perspective, based on 2024
h of which are below the averages of
valuation is in line with the 2014-2018
w years is expected to exceed the
Year 2027 metric).