Goal (TGT 12.53%) The stock exploded 12% by 11:15 a.m. after the company beat Wall Street analysts’ second-quarter revenue and earnings forecasts on Wednesday morning.

At the start of the quarter, analysts predicted that Target would earn $2.18 per share on revenue of $25.2 billion – but Target far exceeded those forecasts. Revenue came in at $25.4 billion, while earnings came in at a strong $2.57 per share.

Target’s second quarter results

Target reported a 3% year-over-year increase in second-quarter sales, including a 2% increase in existing store sales. The key difference was e-commerce sales, which rose nearly 9% year-over-year and accounted for the final one percent of overall sales growth.

Target boosted this still modest sales growth with a dramatic 160 basis point increase in profit margin (now 6.4%), demonstrating the margin benefits of selling online. And with each additional sale generating more profit for Target, profits increased 42% year over year.

CEO Brian Cornell highlighted this effect, pointing to Target’s “double-digit growth in our same-day delivery services” as an example of how higher online sales helped Target turn the company around.

Is Target stock a buy?

Now the question is whether Target can keep it up. As for guidance, management warned that store sales growth will likely slow to 0% to 2% in the third quarter, and forecast overall growth for the year will also be in that range. Regardless, management was able to easily raise its earnings forecast for the third quarter and the full year.

Target expects to earn about $2.25 per share in the current third quarter and end 2024 with earnings of about $9.35 per share.

What does this mean for the stock’s valuation? At a share price of $160, earnings come in at $9.35, which gives a still modest P/E ratio of 17. Considering that most analysts expect the company’s growth to slow to about 8% annually over the next five years – and that Target himself predicts a slowdown in the near future – the stock seems to have fully exhausted its price and is probably no longer an object of purchase.