Walmart vs Target – Which One Is Better For Public & Investors?

Walmart vs Target

In the dynamic world of retail giants, the battle between Walmart vs Target has captured the attention of both savvy shoppers and shrewd investors alike. As these two industry behemoths continue to innovate and adapt to changing consumer landscapes, the question arises-

Which one holds the key to a brighter future for the public and investors? 

Walmart vs Target

From Walmart’s “Everyday Low Prices” to Target’s trendsetting store experience, each contender brings a unique set of strengths to the arena. In this exploration, we’ll dissect their strategies, analyze their financial prowess, and uncover the factors that might sway the scale in favor of either Walmart or Target. 

Stay tuned for an in-depth comparison that could reshape your investment insights!

(A) Walmart vs Target: Key differences

Walmart and Target, both prominent names in the retail landscape, have carved unique identities within the industry. Walmart, renowned for its expansive store network and commitment to affordability, caters to a wide range of needs. Target, on the other hand, combines style and innovation to offer a curated shopping experience. 

Understanding their individual strengths and market positioning provides valuable insights into the diverse options available to consumers. So, let’s delve into the key differences between Walmart vs Target-

Key AspectsWalmartTarget
Business ModelHypermarket, Supercentre, Discount RetailerGeneral Merchandise Retailer, Department Store
Pricing Strategy“Everyday Low Prices”A mix of Affordable and Stylish Products
Store CountOver 10,500 stores globally Around 1,900 stores in the United States
Global PresenceOperates in multiple countriesPrimarily operates in the United States
E-Commerce FocusExpanding Online Presence and delivery optionsInvesting in e-commerce growth
Store ExperienceFocuses on affordability and convenienceEmphasizes stylish and enjoyable shopping
Walmart vs Target: Key Differences

Now let’s compare Walmart and Target based on performance in the market-

Market PositioningWide-ranging products, catering to diverse needsMix of trendy products with an urban focus
Investor AppealStable company, dividends, global presenceE-commerce growth, urban market potential
CompetitionFaces competition from various retailersCompetes with other retail chains and online
Financial PerformanceLarge revenue, stable but moderate growthSolid revenue with potential for e-commerce
DividendsHistorically pays dividends to shareholdersHas paid dividends, but the focus may shift
Revenue (2022)$611.3 billion $109.1 billion
Operating Income (2022)$20.4 billion$3.848 billion
Total Assets (2022)$83.754 billion$53.34 billion
Comparison of Walmart vs Target (Based on performance in the market)

(B) Business Model Comparison

While Walmart’s business model centers on affordability and a diverse product range, Target’s model revolves around creating a distinct in-store and online experience with a focus on stylish products. Walmart’s extensive global presence gives it a wide-reaching advantage, whereas Target’s emphasis on curated selections caters to a more niche market.

(B.1) Walmart Business Model

Walmart business model

Walmart, one of the world’s largest retail corporations, operates on a comprehensive business model that spans multiple formats and markets. Its strategy focuses on providing customers with an array of products at competitive prices while leveraging its size and scale for operational efficiency and global expansion.

Let’s look at its business model

(B.1.1) Hypermarkets and Supercentres

Walmart’s core business revolves around its hypermarkets and supercentres, which are large-format stores offering a diverse range of products under one roof. These stores typically include groceries, electronics, apparel, home goods, and more. The “Everyday Low Prices” philosophy is a cornerstone of this model, ensuring that customers receive value for their purchases on a consistent basis.

(B.1.2) E-Commerce and Online Presence

Recognizing the changing landscape of retail, Walmart has invested significantly in its e-commerce platform. Customers can purchase products online and have them delivered or opt for in-store pickup. The online presence also facilitates the sale of a vast array of products beyond what might be available in physical stores.

(B.1.3) Global Expansion

Walmart’s business model is not confined to the United States. The company has established a global footprint in various countries. It tailors its offerings to suit local preferences while maintaining its commitment to value and affordability.

(B.1.4) Sam’s Club

Walmart’s membership-based warehouse club, Sam’s Club, targets small businesses and individual consumers. These people seek bulk purchases at discounted rates. This model combines retail with a membership-driven approach, offering savings to customers willing to pay a subscription fee.

In conclusion, Walmart’s business model centers on providing consumers with a broad range of products at competitive prices through various store formats, online channels, and private-label offerings. Its global presence, operational efficiency, and commitment to affordability define its success in the retail industry.

(B.2) Target Business Model

Target business model

Target follows a distinctive business model that emphasizes creating an enjoyable shopping experience and offering trendy, quality products. As a general merchandise retailer, it positions itself as a destination for stylish and curated shopping.

  • Store Identity: Target’s store layout, design, and product selection contribute to an innovative and unique shopping environment.
  • Urban Focus: The retailer strategically positions its stores in urban areas, appealing to a demographic that values style, quality, and convenience.
  • E-commerce Growth: Target recognizes the significance of e-commerce and has been actively expanding its online presence to tap into the growing digital market.
  • Curated Selection: With an emphasis on quality and style, Target’s product range is curated to cater to consumers seeking a blend of trendiness and practicality.

(C) Walmart vs Target: Comparing the Revenue Sources

Let’s compare the revenue sources of both the retail giants-

Revenue SourcesWalmartTarget
Brick-and-MortarRevenue is generated from physical retail stores, including hypermarkets, supercentres, and discount stores.Sales from physical stores, including general merchandise retail.
E-CommerceGrowing revenue from online sales, reflecting investments in digital platforms and expanding e-commerce presence.Expanding digital sales through online platforms and services.
GroceriesA significant portion of revenue comes from grocery sales, offering a wide range of food and consumable products.Sales of groceries and essential items, including fresh produce.
General MerchandiseBeyond groceries, revenue is derived from the sale of various products like electronics, apparel, and more.Revenue from selling a diverse range of trendy and stylish products.
InternationalRevenue generated from operations in international markets accounts for a portion of the overall earnings.While primarily focused on the US, Target has limited operations internationally.
ServicesRevenue from various services such as financial services, healthcare clinics, and other in-store offerings.Limited services compared to Walmart, with a focus on retail.
Walmart vs Target: Comparing the Revenue Sources

(C.1) How much revenue did they earn in FY23? 

Look at the table given below to find out.

Revenue (2022)$611.3 billion $109.1 billion
Operating Income (2022)$20.4 billion$3.848 billion
Total Assets (2022)$83.754 billion$53.34 billion
Comparing the financials of Walmart and Target

From the above table, it is clear that Walmart was the winner in terms of financials. Is the case the same in terms of stock prices too? Go through the next section to find out.

(D) Stock Price Comparison

Let’s look at the stock price comparison for Walmart vs Target as of 31st August 2023-

Name of the StockWalmart (WMT)Target (TGT)
% Change+0.26%-0.66%
52 Week Range$128.07 – $162.78$120.75 – $181.70
Market Cap$435.19 billion$58.21 billion
P/E Ratio30.5817.42
Dividend Yield1.41%3.47%
Walmart vs Target: Stock Price Comparison (Source: Google Finance)

Walmart and Target are two of the largest retailers in the United States, competing for customers and market share in a variety of categories, such as groceries, household essentials, apparel, home products, and online sales. Both companies have been resilient during the COVID-19 pandemic, as they were deemed essential businesses and benefited from increased consumer demand for their products and services.

However, their stock prices have diverged significantly in the past year, reflecting their different growth prospects and valuation multiples. Walmart’s stock price has increased by about 26% in the past year. This reached a new all-time high of $162.78 on August 30, 2023. Target’s stock price has declined by about 31% in the same period, falling to a 52-week low of $120.75 on August 27, 2023.

(D.1) Key Reasons for their stock price divergence

(D.1.1) Difference in Online Sales Growth & Profitability

Walmart has been investing heavily in its e-commerce capabilities. Such as expanding its online assortment, improving its delivery and pickup options, acquiring digital brands, etc. Also, it launched a subscription service called Walmart. These initiatives have paid off, as Walmart’s online sales grew by 37% in the second quarter of fiscal year 2024, representing about 19% of its total sales.

Moreover, Walmart’s e-commerce business has become profitable at an operating level for the first time in its history.

Target, on the other hand, has seen its online sales growth slow down significantly, as it faces tougher comparisons with the previous year when it benefited from a surge in online orders during the lockdowns. 

Target’s online sales grew by only 10% in the second quarter of fiscal year 2024, representing about 13% of its total sales. Target’s e-commerce business is also less profitable than Walmart’s, as it relies more on third-party vendors and delivery services.

(D.1.2) Difference in Valuation Multiples

This is another reason for the stock price divergence. Walmart trades at a higher price-to-earnings (P/E) ratio than Target, reflecting its higher growth expectations and stronger competitive position. 

Walmart’s P/E ratio is currently 30.58, based on its trailing 12-month earnings per share (EPS) of $5.19. Target’s P/E ratio is currently 17.42, based on its trailing 12-month EPS of $7.30.

(D.1.3) Walmart pays a Lower dividend yield than Target

Walmart also pays a lower dividend yield than Target. This feature reflects its lower payout ratio and higher reinvestment rate. Walmart’s dividend yield is currently 1.41%, based on its annual dividend of $2.28 per share. Target’s dividend yield is currently 3.47%, based on its annual dividend of $4.34 per share.

(D.2) Walmart vs Target: Which one is better for investors?

Walmart and Target have different stock price performance and valuation metrics. These facts reflect their different online sales growth and profitability, as well as their different growth expectations and competitive position. Investors who are looking for a higher-growth and more dominant retailer may prefer Walmart over Target. While investors who are looking for a lower-valuation and higher-dividend retailer may prefer Target over Walmart.

(E) Pros and Cons of Walmart

Stock Price of Walmart

Now, here comes the most anticipated part of this write-up. In this segment, we will look into the benefits and challenges that you may face while investing in Walmart.

(e.1) Pros (Benefits) for the Public

  • Affordable: Walmart is known for its “Everyday Low Prices” strategy, offering a wide range of products at competitive prices. This can benefit consumers by providing more affordable options for their shopping needs.
  • Convenient: Walmart’s extensive store network and online presence provide consumers with convenient options for shopping in-person or online.

(E.2) Pros (Benefits) for the Investors

  • Stability: Walmart is one of the largest retail chains in the world with a well-established presence. Its size and scale can offer a certain level of stability to investors.
  • Dividends: Historically, Walmart has paid dividends to its shareholders, which can be attractive for income-focused investors.
  • Global Presence: Walmart operates internationally, which provides exposure to diverse markets and potential for growth.

(E.3) Challenges (Cons) in Walmart

  • Intense Retail Competition: Walmart operates in a highly competitive retail environment, which can impact its profit margins and growth opportunities.
  • Competition from e-commerce websites: The rise of e-commerce giants like Amazon has prompted Walmart to invest heavily in its online operations to compete effectively. 

(F) Pros and Cons of Target

Stock Price of Target (Walmart vs Target)

Let’s look at the advantages and disadvantages that you will face while using or investing in Target.

(F.1) Pros for the Public

  • Innovative Shopping Experience: Target focuses on creating a unique and enjoyable shopping experience through store layout, design, and product selection.
  • Quality & Style: Target offers a selection of trendy and stylish products, attracting shoppers looking for quality and design.

(F.2) Pros for the Investors

  • E-Commerce Growth: Target has been investing in its online platform, and its digital sales have been growing, which could appeal to investors looking for exposure to e-commerce growth.
  • Focus on Urban Markets: Target’s store format and locations in urban areas can tap into a different demographic and provide growth opportunities.

(F.3) Challenges (Cons) Of Target

  • Niche Market: While Target’s focused approach can be beneficial, it may also limit its market compared to a retailer with a more broad-ranging strategy like Walmart.
  • Heavy Competition: Like Walmart, Target faces competition from various retailers, both brick-and-mortar and online.

(G) Final Words for Walmart vs Target: Which one is Better?

Here comes the judgment part for Walmart vs Target. Whether Walmart or Target is better for the public and investors depends on individual preferences and investment goals. Walmart’s size and stability can be attractive to certain investors, while Target’s focus on creating a unique shopping experience and e-commerce growth could appeal to others. 

Both companies have their strengths and challenges, so it’s important to carefully consider your investment strategy and risk tolerance before making a decision. Always conduct thorough research and consider seeking advice from financial professionals before making any investment choices! 

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Published By: Supti Nandi
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