Is Wal-Mart Stores, Inc. (NYSE:WMT) a better investment than Target Corporation (NYSE:TGT)? Would long WMT/short TGT be a good pairs trade? I was asked these questions recently and thought I would do some digging. Despite being placed in different sectors, industries, and sub-industries, I think one can be assume that these two retail giants have enough in common to perform this analysis.
From a fundamental perspective, the two companies appear to be about equal. WMT has a higher projected P/E Ratio than TGT but also has higher projected sales growth. TGT has a higher ROE for the most recent 12-month period but the two companies have similar long term (5-Year average) ROE.