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Costco Wholesale Corporation (COST) vs Target Corporation (TGT): Which Is the Better Buy in 2026?

As of 2026-06-19, COST is overvalued at $951, with a DCF intrinsic value of $451 and a margin of safety of -111%. TGT is fairly valued at $131, with an intrinsic value of $131 and a margin of safety of -0%. Of the two, TGT has the wider margin of safety.

COST
Costco Wholesale Corporation
$951.45
VS
TGT
Target Corporation
$130.74

Rewards

COST
  • ★Costco Wholesale Corporation has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
  • ★Costco Wholesale Corporation scores 96/100 on the Economic Moat Score (Wide Moat), with roic consistency as the strongest competitive dimension.
  • ★Free cash flow has grown at a 30.8% CAGR over the past 4 years, demonstrating strong earnings power growth.
TGT
  • ★Target Corporation has maintained ROIC above 10% for 4 consecutive years, suggesting solid business economics.
  • ★Target Corporation scores 78/100 on the Economic Moat Score (Wide Moat), with roic consistency as the strongest competitive dimension.
  • ★Return on equity has consistently exceeded 20% over 4 years, indicating efficient use of shareholder capital.

Risks

COST
  • ⚠Gross margin of 12.9% is low, suggesting a competitive or commodity-like market with limited pricing power.
  • ⚠Despite buyback spending, shares outstanding increased in 3 out of 4 years — stock-based compensation is offsetting repurchases.
  • ⚠FCF yield of 1.6% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
TGT
  • ⚠FCF yield of 5.3% suggests reasonable valuation assuming continued moderate growth.
  • ⚠PEG ratio of 2.48 indicates the stock is expensive relative to its expected growth — the market may be pricing in more growth than analysts project.

Key Valuation Metrics

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COST
TGT
Valuation
$6.95B
Free Cash Flow
$3.14B
1.65%
FCF Yield
5.29%
47.98
Trailing P/E
17.29
42.05
Forward P/E
14.69
Quality & Moat
31.32%
ROIC
10.65%
29.15%
ROE
22.02%
12.88%
Gross Margin
28.14%
4.82
PEG Ratio
2.48
Balance Sheet Safety
Net cash
Net Debt / Equity
0.96
N/A
Interest Coverage
N/A
-0.07
Net Debt / EBITDA
1.89
0.60%
Dividend Yield
3.48%
COST: 5Ties: 1TGT: 6
COSTTGT

Historical Fundamentals

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COST

Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.

TGT

Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.

Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.

$1 Retained Earnings Test

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COST
$19.41
created per $1 retained over 3 years
Exceptional Value Creator
Σ Retained
$9.28B
Δ Market Cap
+$180.14B
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
TGT
$-1.09
created per $1 retained over 3 years
Market Cap Declined
Σ Retained
$5.82B
Δ Market Cap
$-6.36B
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer

Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer

Discounted Cash Flow (DCF) Analysis

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COST
110.9% Overvalued
Price is 110.9% above estimated fair value
Current Price: $951.45
Fair Value: $451.13
Strongly undervalued
Undervalued
Fairly valued
Overvalued
Strongly overvalued
TGT
0.1% Overvalued
Price is 0.1% above estimated fair value
Current Price: $130.74
Fair Value: $130.56
Strongly undervalued
Undervalued
Fairly valued
Overvalued
Strongly overvalued

Reverse DCF — Market-Implied Growth

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COST

What growth rate is the market pricing in at $951?

+20.7%
Market-Implied Owner Earnings Growth
Standard FCF implies +22.8%

The market implies +20.7% Owner Earnings growth, above historical trends.

Standard FCF implies a demanding +22.8%, reflecting heavy growth investment.

TGT

What growth rate is the market pricing in at $131?

+7.9%
Market-Implied Owner Earnings Growth
Standard FCF implies +10.1%

The market implies +7.9% Owner Earnings growth, roughly in line with history — reasonably priced.

Standard FCF implies +10.1%, reflecting ongoing growth investment.

Economic Moat Score

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COST
96/100
Wide Moat
70+ Wide · 40-69 Narrow · <40 None

Wide moat with strength across all dimensions. ROIC Consistency is the standout factor.

Composite score measuring competitive advantage durability across four dimensions: returns above cost of capital, pricing power stability, revenue predictability, and capital efficiency. Based on 4 years of fundamental data.
TGT
78/100
Wide Moat
70+ Wide · 40-69 Narrow · <40 None

Wide moat with strength across all dimensions. ROIC Consistency is the standout factor.

Composite score measuring competitive advantage durability across four dimensions: returns above cost of capital, pricing power stability, revenue predictability, and capital efficiency. Based on 4 years of fundamental data.

Forensic Accounting

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COST
-2.65
Unlikely Manipulator
Above -1.78 = likely manipulator · -2.22 to -1.78 = grey zone

M-Score Trend

Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
TGT
-2.33
Unlikely Manipulator
Above -1.78 = likely manipulator · -2.22 to -1.78 = grey zone

M-Score Trend

Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.

Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.

Ownership Breakdown

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COST
Insiders 0.2%Institutions 73.8%Retail & Other 26.0%
No. of Institutional Holders5,187
High insider ownership aligns management incentives with shareholders — a key signal in Buffett-style analysis. Institutional concentration can indicate smart-money conviction but also crowding risk.
TGT
Insiders 0.3%Institutions 87.6%Retail & Other 12.1%
No. of Institutional Holders2,377
High insider ownership aligns management incentives with shareholders — a key signal in Buffett-style analysis. Institutional concentration can indicate smart-money conviction but also crowding risk.

High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.

Insider Buying Activity

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COST
0
Buys (3M)
0
Buys (12M)
No open market insider purchases found.
Open market purchases · includes direct & indirect ownership · excludes option exercises
TGT
0
Buys (3M)
0
Buys (12M)
No open market insider purchases found.
Open market purchases · includes direct & indirect ownership · excludes option exercises

Open market purchases · includes direct & indirect ownership · excludes option exercises.

Insider Selling Activity

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COST
1
Sells (3M)
12
Sells (12M)
Total value (12M): $18.18M
FRATES CATON
Officer
$695,100
@ $993.00 · 2026-04-01
ADAMO CLAUDINE
Officer
$732,205
@ $1003.02 · 2026-03-09
JONES TERESA A
Officer
$838,318
@ $986.26 · 2026-01-21
DECKER SUSAN LYNNE
Director
$437,390
@ $955.00 · 2026-01-16
KLAUER JAMES C
Officer
$1.41M
@ $939.00 · 2026-01-14
POLIT JAVIER
Officer
$2.26M
@ $866.38 · 2025-12-30
WILCOX WILLIAM RICHARD
Officer
$2.23M
@ $930.13 · 2025-11-07
ADAMO CLAUDINE
Officer
$2.53M
@ $935.68 · 2025-10-24
BARBRE TIFFANY MARIE
Divisional Officer
$1.16M
@ $934.91 · 2025-10-24
FRATES CATON
Officer
$1.40M
@ $910.02 · 2025-09-29
JONES TERESA A
Officer
$595,230
@ $992.05 · 2025-08-20
RUBANENKO YORAM B.
Officer
$3.90M
@ $974.96 · 2025-07-14
DECKER SUSAN LYNNE
Director
$536,058
@ $980.00 · 2025-06-18
CALLANS PATRICK J
Officer
$3.01M
@ $1002.77 · 2025-06-09
RIEL PIERRE
Officer
$2.03M
@ $1014.15 · 2025-06-06
KLAUER JAMES C
Officer
$3.92M
@ $981.07 · 2025-04-17
MILLERCHIP GARY
Officer
$1.03M
@ $940.01 · 2025-03-27
ADAMO CLAUDINE
Officer
$830,304
@ $922.56 · 2025-03-24
FRATES CATON
Officer
$765,213
@ $900.25 · 2025-03-18
VACHRIS ROLAND MICHAEL
Chief Executive Officer
$3.35M
@ $931.00 · 2025-03-11
GALANTI RICHARD ALAN
Officer and Director
$1.27M
@ $894.97 · 2024-10-24
JONES TERESA A
Officer
$717,236
@ $896.54 · 2024-10-23
RIEL PIERRE
Officer
$1.79M
@ $896.71 · 2024-10-15
CALLANS PATRICK J
Officer
$2.23M
@ $893.94 · 2024-09-30
ADAMO CLAUDINE
Officer
$2.84M
@ $888.99 · 2024-09-30
FRATES CATON
Officer
$1.50M
@ $883.35 · 2024-09-30
GALANTI RICHARD ALAN
Officer and Director
$868,962
@ $868.96 · 2024-08-15
DECKER SUSAN LYNNE
Director
$543,430
@ $876.50 · 2024-08-15
JONES TERESA A
Officer
$3,330
@ $832.50 · 2024-07-25
HINES DANIEL M
Officer
$2.54M
@ $846.37 · 2024-07-15
DENMAN KENNETH D
Director
$298,036
@ $851.53 · 2024-07-15
Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives
TGT
1
Sells (3M)
3
Sells (12M)
Total value (12M): $1.74M
SYLVESTER CARA A
Officer
$1.26M
@ $125.89 · 2026-05-29
LIEGEL MATTHEW A
Officer
$240,593
@ $117.19 · 2026-03-17
LIEGEL MATTHEW A
Officer
$240,593
@ $117.19 · 2026-03-17
LIEGEL MATTHEW A
Officer
$206,245
@ $100.90 · 2025-06-10
LIEGEL MATTHEW A
Officer
$32,580
@ $113.52 · 2025-03-07
GOMEZ RICHARD H
Officer
$997,715
@ $157.17 · 2024-09-27
LIEGEL MATTHEW A
Officer
$153,130
@ $153.13 · 2024-08-30
LIU DON H
Officer
$1.00M
@ $160.00 · 2024-08-22
Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives

Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.

🎭 Mr. Market's Mood

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COST
FearGreed
😐Neutral(52/100)

"Market is pricing this stock without strong emotion in either direction"

Composite sentiment score based on 6 market signals. Inspired by Buffett's "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
TGT
FearGreed
😏Greed(62/100)

"Market is optimistic — be cautious and ensure you have a margin of safety"

Composite sentiment score based on 6 market signals. Inspired by Buffett's "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.

Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.

⚖️ Buffett Signal

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COST
⚪Awaiting DCF Data

The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.

DCF Margin of Safety: N/AMr. Market's Mood: Neutral (52)
TGT
⚪Awaiting DCF Data

The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.

DCF Margin of Safety: N/AMr. Market's Mood: Greed (62)
View COST Full AnalysisView TGT Full Analysis

Frequently Asked Questions: COST vs TGT

Is Costco Wholesale Corporation or Target Corporation more undervalued in 2026?▼

Based on our discounted cash flow model, TGT trades at a -0.1% margin of safety (intrinsic value $131 vs. price $131), compared to COST's -110.9% margin of safety (intrinsic $451 vs. $951).

Which stock has a wider economic moat, Costco Wholesale Corporation or Target Corporation?▼

COST scores 96/100 (Wide moat), while TGT scores 78/100 (Wide moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.

Which company has better free cash flow, Costco Wholesale Corporation or Target Corporation?▼

Target Corporation (TGT) generates a 5.3% free cash flow yield, compared to Costco Wholesale Corporation's 1.6%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.

Which stock has higher return on invested capital, Costco Wholesale Corporation or Target Corporation?▼

COST earns 31.3% ROIC versus TGT's 10.6%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.

Which dividend is safer, Costco Wholesale Corporation's or Target Corporation's?▼

COST's dividend earns a safety score of 85/100 (Very Safe), compared to TGT's 69/100 (Safe). COST has raised its dividend for 0 consecutive years.