What’s interesting about Target Corporation (NYSE:TGT) is that Target stock truly is in the eye of the beholder. To be sure, either way Target stock does look cheap. It trades at about 13x 2017 analyst EPS estimates. Target’s dividend now yields about 4.3%.

From there, though, the case for or against Target stock gets trickier. How much of Target’s recent weakness is due to self-inflicted wounds (which, in theory, should be fixable)? Is Target’s brand in good shape, or declining amid tough competition? Is it good that Target stores have a diversified offering,or does that just make its value proposition undifferentiated?

More broadly, is Target a retailer in decline – closer to struggling department stores like Kohl’s Corporation (NYSE:KSS) or Dillard’s, Inc. (NYSE:DDS) – or just a company dealing with short-term headwinds and investments that set it up well for the future?

To be honest, I’m not entirely sure of the answers to those questions, at least not just yet. But I do think there are enough questions, and enough near-term problems, to require a much lower entry point for TGT stock than $58.

How Target Stock Got Here

Target stock has gotten a bit of a reprieve of late, climbing 20% off a five-year low hit in mid-June. That low came after the one-two punch of Kroger Co (NYSE:KR) cutting guidance on June 15th and, the next day, Amazon.com, Inc. (NASDAQ:AMZN) announcing its buyout of Whole Foods Market.

A solid Q2 report from Target last month helped. But Target stock now is facing resistance around $58-$59 that has held since late February. And there’s more to the sell-off than just competitive concerns.

The fact is that Target’s numbers simply aren’t very impressive. Same-store sales actually declined in fiscal 2016 (ending January 2017). Operating income fell 3% for the year. Fiscal 2017 doesn’t look all that much better, even if guidance has improved after the first half. Target still expects adjusted EPS to decline over 10% – even with a lower share count – and comparable sales are expected to be flat, plus or minus a percentage point.

Those kind of numbers suggest the current multiple for Target stock is appropriate, if not a little high. Kohl’s trades at 12x forward earnings, Dillard’s around 15x, and Kroger just above 10x. In other words, expecting upside from Target stock requires that it outperform those competitors and be valued and a premium to them. And it’s there that I think the bull case for Target stock gets a bit too tough.

Looking Forward at (the) Target

To be fair, Target is investing heavily in its business at the moment. It’s spending as much as $7 billion in capital to upgrade stores, an effort that will also have some impact on operating income and margins. It’s raising its minimum wage to $15 by the end of the decade, in an effort to improve employee retention and the shopping experience. And it’s cutting prices as well.

Those efforts have a near-term impact on margins and profits. But the argument from Target management is that investing in the business now will position itself to take share down the line.

It’s an interesting strategy in an age where most retailers are looking to cut costs, not increase them. The obvious question is: will it work?

Target Stock Is Too Tough

And the obvious answer is: who knows? The core question about Target’s role in the new retail environment is whether its offering is nicely diversified or akin to the old age of being “a jack of all trades and master of none.” It’s an important question to answer, because the case for Target stock is all about whether the company can withstand the onslaught of competition.

Rival Wal-Mart Stores Inc (NYSE:WMT) has improved its sales, gone to the mat on grocery pricing, and built out an impressive and flexible e-commerce strategy. Online competition from Wal-Mart, Amazon, and myriad other retailers is only going to intensify. And in this retail environment, Target’s efforts to be ‘good enough’ might not be good enough. There are better grocers with cheaper prices. There are better e-commerce options. And there are still too many brick-and-mortar stores to compete with Target that are desperately trying to undercut it with promotional strategies and/or pricing.

The strategy isn’t doomed. But I’m hardly confident it’s going to work. Recent optimism aside, it’s worth pointing out that FY17 guidance suggests the average Target store, over three years, will increase sales about 1.5 percent – total. That’s not enough to leverage SG&A expense – which likely means that the average store is making less money this year than it did in fiscal 2014.

Add to that the margin impact of wage pressure and pricing cuts going forward. Even an improvement in the recent sales trend suggests Target’s overall profits will be roughly flat. That in turn, implies little upside in Target stock from current levels.

In other words, even if the strategy works, I’m not sure TGT stock provides all that much in the way of returns. Given that I’m not sure that strategy will work, there seem many easier ways to make money than Target stock.

As of this writing, Vince Martin has no positions in any securities mentioned.