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Target Corporation beats by $0.48, beats on revenue

  • Target Corporation (TGT): Q4 EPS of $1.30 beats by $0.48.
  • Revenue of $21.52B (-3.9% Y/Y) beats by $60M.
  • Press Release
Comments (25)
  • mbn
    , contributor
    Comments (413) | Send Message
     
    How did they beat on earnings? I read that store traffic really slowed after the security breach. Was the business over the internet really that strong?
    26 Feb, 08:18 AM Reply Like
  • 6869451
    , contributor
    Comments (52) | Send Message
     
    They beat the January downward-adjusted earnings target.

     

    Fourth quarter Adjusted EPS of $1.30; full-year Adjusted EPS of $4.38

     

    Fourth quarter GAAP EPS of $0.81; full-year GAAP EPS of $3.07

     

    I dont have a finance background but this sounds pretty bad. How is EPS "adjusted"? Are these adjusted (non-GAAP) #s worthless?

     

    Long TGT
    26 Feb, 08:24 AM Reply Like
  • LongTruth
    , contributor
    Comments (23) | Send Message
     
    The biggest adjustment was taking out the .40 loss due to Canadian operations. If you assume they will continue to lose 0.40 per quarter in Canada, then go with GAAP numbers. Essentially they could discontinue Canadian operations, and drop this loss going forward, but then you would have to reduce your growth estimate. Of course, this is my oversimplified understanding.
    26 Feb, 09:50 AM Reply Like
  • jaialai1234
    , contributor
    Comments (10) | Send Message
     
    That is a good question mbn. I'm still a bear on the stock until I see that they have the breech problem under control. I have some put options on the stock and right now it looks like I was wrong.
    26 Feb, 10:26 AM Reply Like
  • Bingy77
    , contributor
    Comments (139) | Send Message
     
    Correct, they stated in 2014, the Canadian operations will be included in GAAP and no longer adjusted since it has been operating over a year.
    26 Feb, 12:08 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3480) | Send Message
     
    Except store traffic wasn't really slowed. There's a study by a research group, floating around that 88% of shoppers were not changing their Target shopping habits. The "really slowed" has been anecdotal, & media commentary.
    26 Feb, 08:28 AM Reply Like
  • financeminister
    , contributor
    Comments (609) | Send Message
     
    yes, I'm also skeptical about these anecdotal commentaries... because I have my own anecdotal commentary too. I didn't change my behavior (shopped and changed my credit card). When I went during christmas season to three different Target centers (one Galveston, TX and two in Houston), the crowds were large (probably due to the 10% discount) and the cashiers, whether honest or not, were telling me that crowds continued to be pour in. We went to the candy rack to get some post-season discounts and they were all sold out.

     

    So just don't know till you know you know :-)
    26 Feb, 08:39 AM Reply Like
  • Mostapasta
    , contributor
    Comments (24) | Send Message
     
    Do you have a link or article name? (I would like to read it)
    26 Feb, 08:42 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3480) | Send Message
     
    Mostapasta

     

    Wasn't as hard to find again as I thought it was going to be...
    http://ti.me/1ekbaIm

     

    It's 82% unchanged in habits. 11% shop a little less at Target. 5% stop shopping at Target. That's now, right after the breach, so that will improve as people shrug it off.

     

    Poll by AP, so I don't know how good their survey techniques are. Conducted in Minnesota—corporate headquarters of Target
    26 Feb, 08:49 AM Reply Like
  • Big Thunder
    , contributor
    Comments (528) | Send Message
     
    "Conducted in Minnesota—corporate headquarters of Target"

     

    I noticed the MN connection as well, so I poked around to try to find the poll's methodology. I found this:

     

    "The AP-GfK Poll was conducted Jan. 17 through Tuesday and involved interviews with 1,060 adults. The survey has a margin of sampling error of plus or minus 3.9 percentage points.

     

    The poll used KnowledgePanel, GfK’s probability-based online panel that is designed to be representative of the U.S. population. Respondents were first selected randomly using phone or mail survey methods, and later, completed this survey online. People selected for KnowledgePanel who didn’t otherwise have Internet access were provided with access at no cost to them."

     

    http://bit.ly/NwRxSO
    26 Feb, 08:56 AM Reply Like
  • Mostapasta
    , contributor
    Comments (24) | Send Message
     
    Thank you!
    26 Feb, 09:03 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3480) | Send Message
     
    BT,

     

    So not ideal study methodology ... but not terrible either.
    26 Feb, 09:05 AM Reply Like
  • J Mintzmyer
    , contributor
    Comments (3594) | Send Message
     
    Then again a 5% revenue drop for a retailer is DEVASTATING. If the 5% (likely lighter shoppers) stop completely and the 10% tone it down a bit for a blended total loss of 5-6%, TGT's EPS could be hit by as much as 20%...

     

    Gross margin $ won't go down by much more than 5-6%, but with the same SGA base, that impact could easily be 20%.

     

    Then if you add in security/upgrade costs, it gets even nastier.

     

    I'm long TGT. I'll probably add a LOT more if we go below $50, but people need to understand the seriousness here.
    26 Feb, 11:26 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3480) | Send Message
     
    Mintzmyer

     

    That assumes people will actually change their habits. They rarely do. Especially since the risk is at every store, not just Target. This was an early survey -- and reality is usually quite lighter. As the sector, retail, improves, this will go up again anyway.

     

    How do you get 20% EPS drop from 5-6% shopping reduction?
    26 Feb, 11:53 AM Reply Like
  • bd1201
    , contributor
    Comments (2) | Send Message
     
    Not saying anything in regards to the financials, but working for a retail wholesaler that relies on floor traffic to drive replenishment orders, the winter storm surges we've had this year is a primary factor to the drop in retail revenue.

     

    If you look across other stores (macys/walmart/etc), you'll see a decrease in sales for all of them for the season, even though consumer confidence is up to LY. Like "Land of Milk and Honey" says, the risk is at every store, not just Target and people rarely change.

     

    Better weather should translate to better floor traffic, regardless of the security breach.
    27 Feb, 02:46 PM Reply Like
  • bd1201
    , contributor
    Comments (2) | Send Message
     
    Not saying anything in regards to the financials, but working for a retail wholesaler that relies on floor traffic to drive replenishment orders, the winter storm surges we've had this year is a primary factor to the revenue drop nobody is talking about. If you look at the consumer confidence up to LY and compare TGT to other stores like Macy's/Walmart/etc, you can see a comparable drop for all of them, not necessarily isolated to TGT.
    27 Feb, 10:13 PM Reply Like
  • I Did it My Way
    , contributor
    Comments (17) | Send Message
     
    While I'm glad to see Target was able to beat the recently reduced revenue and earnings estimates, they're still way down from earlier estimates and year over year. Their outlook remains foggy with uncertainty in the air. I sincerely believe Target will weather the storm their currently facing and come through quite strong over the long run. However, in the near terms I can't put my money behind TGT because I feel there is a higher chance of more bad news than good which will weigh on the share price. In addition, there are way too many other solid dividend paying companies to choose from that make Target an unnecessary risk in my portfolio. In fairness, I will disclose that I currently own TGT put options because the TGT trend is down and I simply see more bad news than good on the horizon. Good luck to you all.
    26 Feb, 08:47 AM Reply Like
  • quinnman
    , contributor
    Comments (104) | Send Message
     
    Revs down 3.9% y/y.....the recovery continues in US economy...sarcasm
    26 Feb, 09:00 AM Reply Like
  • utah72
    , contributor
    Comments (95) | Send Message
     
    I'm quite sure TGT doesn't represent the entire US economy.
    26 Feb, 09:05 AM Reply Like
  • quinnman
    , contributor
    Comments (104) | Send Message
     
    Not a bad sample
    26 Feb, 09:49 PM Reply Like
  • norteamericano
    , contributor
    Comments (45) | Send Message
     
    Up 3% early. Seems like the Canadian expansion is the big drag.
    26 Feb, 09:37 AM Reply Like
  • AdamDivy
    , contributor
    Comments (400) | Send Message
     
    And it's over $60 and touched $61. Shocked to say the least but happy to see my worst performer from a couple days ago to almost even now.
    26 Feb, 12:11 PM Reply Like
  • bericm
    , contributor
    Comments (23) | Send Message
     
    If at first you don't succeed, redefine success (change the metrics).

     

    YoY Q4 is down 45%, FY13 earnings of $3.07 is down 31%. FY14 guided down, FY15 guided down, stock up 7% and PE hits ~20x. Historical PE is in the 15x range.

     

    Safe to say that TGT is now a speculative buy?
    26 Feb, 01:14 PM Reply Like
  • Bingy77
    , contributor
    Comments (139) | Send Message
     
    I don't know where you get pe of 20x? They guided for 3.85-4.15 for 2014 which includes Canada, 15.58x.
    26 Feb, 02:43 PM Reply Like
  • bericm
    , contributor
    Comments (23) | Send Message
     
    I based 20x on earnings of $3.07; 2014 guidance was in "Adjusted earnings", not GAAP.
    27 Feb, 05:09 PM Reply Like
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