Last week, traditional retail behemoth Walmart (NYSE:WMT) reported outstanding second-quarter numbers that blew estimates out of the water. It was easily Walmart’s best report over the past several years, and it featured 4.5% comparable sales growth — the company’s best mark in a decade.

But, as it turns out, those numbers aren’t so impressive relative to the competition.

Chief rival Target (NYSE:TGT) just reported second-quarter numbers, and they were head-and-shoulders better than Walmart’s numbers. Comparable sales growth was 6.5%, 200 basis points stronger than Walmart’s comp and the best mark in 13 years. Meanwhile, traffic growth was an absurd 6.4%, versus Walmart’s sub-3% traffic growth, and Target’s digital sales growth rate was 41%, versus 40% at Walmart.

Across the board, Target’s quarter was just better. That is why TGT stock is rallying big, and WMT stock is struggling for gains.

But, investors should beware of what comes next. At current levels, TGT stock is getting ahead of itself. This is a great company with solid and improving long-term fundamentals. But in the near-term, valuation risk is high and this stock does look due for a pullback.

Here’s a deeper look.

Target’s Quarter Was Insanely Good

Just when you thought Walmart was getting its groove back as the best retailer in town, Target comes through and reports unprecedentedly strong numbers.

Comparable sales growth of 6.5%? Wow. Just wow. We all thought Walmart was killing it at 4.5% growth. Target just topped that number by 200 basis points. That is the most Target has outperformed Walmart on comparable sales growth since late 2014.

Traffic growth of 6.4%? You’ve got to be kidding me. That is huge traffic growth. Walmart reported 2.2% traffic growth, and the Street thought that was great. Target comes through with a 6.4% traffic gain, and everyone’s jaws are dropping. That is the best mark this company has ever reported (traffic growth reporting started in 2008).

Digital sales growth of 41%? Better than Walmart’s? Again, crazy. The whole narrative is supposed to be that Walmart is morphing into a formidable Amazon (NASDAQ:AMZN) competitor. It looks like both Walmart and Target are morphing into huge e-retail players, and that both will be legitimate competitors for Amazon in the near future.

Meanwhile, gross margins are largely stable despite the digital ramp, which is a testament to strength in the company’s private brands. And, SG&A expenses are under control despite wage hikes because of strong sales growth and lower bonuses. Thus, robust top-line growth is flowing straight through to the bottom-line, and profits are up big.

Overall, Target’s quarter was insanely good. Not only was it one of Target’s best quarters ever as a public company, but it was also head-and-shoulders better than Walmart’s report.

Beware of Target Stock

Although I love the growth narrative supporting Target, I don’t love TGT stock here and now.

The time to buy TGT stock was back in late 2017, when this stock was fighting to get over $60. As the fundamentals have improved over the past several quarters, I’ve stuck with my bullishness on TGT stock, and most recently said that it deserves to trade above $80.

TGT stock is now nearing $90. At these levels, it is tough to get excited about future return potential.

Target stock now trades at nearly 17X forward earnings, which is a sizable premium to the stock’s historical average 15X forward multiple. Assuming current robust growth cools off (retail sales won’t always grow at a 6% rate across the whole U.S.) but remains largely positive thanks to private label growth, e-commerce growth and enhanced omni-channel capabilities, and that margins actually start to improve with wage pressures in the rear-view mirror, I think TGT stock is worth somewhere around $85 today, with potential to hit $120 over the next four to five years.

That return potential isn’t all that exciting.

Plus, it pays to remember what just happened to WMT stock. That stock shot up after great second-quarter numbers. It has since done nothing but grind lower, mostly because the valuation was fully loaded at $100.

We have a similar situation here. Target is killing it right now. Second-quarter numbers were awesome. The stock is on fire. But, TGT stock is fully loaded as the price tag approaches $90. Thus, we could see some normalization over the next few days and weeks.

Bottom Line on TGT Stock

Retail is back, and Target is at the forefront of the resurgence. In fact, Target might be the most outstanding player in this resurgence right now.

But, the time to buy TGT stock was before any of this resurgence was priced in, back below $60 in late 2017. Now, with TGT stock soaring toward $90, the valuation looks fully loaded. The stock may continue to work for now, but the era of out-sized gains is behind it until we see a normalization period.

As of this writing, Luke Lango was long AMZN.