Seeking Alpha

Nail biting time at Target

  • Target (TGT) reports Q1 earnings on May 21 with investors stuck until then with more than a little uncertainty.
  • A slight drop in comp sales by Wal-Mart in Q1 and more blood-letting by Sears in Canada don't bode particularly well for the retailer.
  • There's also the matter of the costs of the massive data breach at Target - either materially on earnings or through an erosion of the brand.
  • TGT -0.6% premarket
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Comments (13)
  • Ajayyy
    , contributor
    Comments (327) | Send Message
     
    Don't see why anyone in the world would hold TGT right now. It just amazes me. The CEO left 2 weeks before ER. Who here expects anything good?

     

    It's not short-term pain, this is more fundamental. TGT will be brought to it's knees. There is almost no way they will succeed in Canada. And they predicted they were going to quadruple the sales in 4 years.
    15 May, 08:47 AM Reply Like
  • BillBrown
    , contributor
    Comments (175) | Send Message
     
    I agree 100%. So does Howard Davidowitz. Here are his comments made on Bloomberg yesterday ... http://bit.ly/1g90xe8

     

    Target's Q1 will be a trainwreck ...
    15 May, 01:27 PM Reply Like
  • Cheesehusker
    , contributor
    Comments (310) | Send Message
     
    Buy the blood - we're not talking Sears or JC Penny's here - where else is midAmerica going to shop - certainly not WalMart.
    15 May, 08:53 AM Reply Like
  • SteveTheHawk
    , contributor
    Comments (1392) | Send Message
     
    Personally, I'm hoping for a little more blood. I would like to grab some around $55. If the earnings report spooks enough people, it just might happen.
    15 May, 10:04 AM Reply Like
  • AnAvgJoe
    , contributor
    Comments (329) | Send Message
     
    Agreed, Steve. Just have to find some more cash - yesterday I used what cash I had handy for some PSEC.
    15 May, 12:27 PM Reply Like
  • drewmeister7777
    , contributor
    Comments (11) | Send Message
     
    Too much fear here. If the report is anything less than the zombie apocalypse, I'm thinking we will see a bit of a bounce.
    15 May, 10:49 AM Reply Like
  • dazman91
    , contributor
    Comments (14) | Send Message
     
    Just talk to mothers in their 30s. A large portion of them shop at Target. They like shopping at Target where they can use the money saving apps, discounts and coupons. Target will get by fine as it finds its feet again, learns from it's mistakes in Canada, and begins to grow and expand once more. As far as I can see, this little bump in the road is an opportunity to buy at a discount for long holders and dividend growth investors.
    15 May, 10:56 AM Reply Like
  • Ajayyy
    , contributor
    Comments (327) | Send Message
     
    It is still surprising for me to see so many interested in TGT. I went long before the last report because that's when there was some real blood. this time we are higher than that level and nothing has changed. TGT should be trading in low 50s and I think it will before the summer is over.

     

    The management has been buying back so many shares over the years and that has what kept the price stable. If these problems worsen, their cash position and growth projects will take a good trim. I've been cashing out my puts on every dip because I know people keep lining up to buy it. But after earnings, I expect the same people to run out.

     

    It's the market and anyone can be wrong. You guys are sticking with it through the tough times and you deserve to be rewarded. I wish you guys luck! I'm just in it for some short-term gains.
    15 May, 12:32 PM Reply Like
  • Just Some Guy
    , contributor
    Comments (562) | Send Message
     
    Their basic retail model is still strong. They are a little slow responding to the Internet/Amazon but so is everybody with brick and mortar. The data breach hasn't been a big hit, and if they deploy new technology (successfully!) in advance of others, that could be a plus. The Canada thing is weak planning and weaker execution, but the basic concept is simple - Target in Canada! And I don't see why it can't be made to work, even if the US stores maintain some advantages the Canadian stores will always have geographic convenience.

     

    I'd say the major risks to Target right now remains the overall directions of the economy and the market. Rate as market perform at least.

     

    Long TGT.
    15 May, 12:33 PM Reply Like
  • Cheesehusker
    , contributor
    Comments (310) | Send Message
     
    Pays a good divvy, good store, very popular with the shoppers, solid demographics, etc etc etc - what's not to like long term? Looking to add post-report
    15 May, 01:24 PM Reply Like
  • jrthomp
    , contributor
    Comment (1) | Send Message
     
    Ask your wives , girlfriends and all the other women in your life: Target or Wal Mart? , and you will know right away where to put your money. Long TGT for me.
    15 May, 02:22 PM Reply Like
  • Justin Clare
    , contributor
    Comment (1) | Send Message
     
    In the Q4 conference call it was mentioned that the largest store improvements were seen in early cycle Canadian stores. Therefore, even with the CEO departure, it seems unlikely that Canadian operations will see bigger losses this year than last. It also seems unlikely that the data breach will have a long term impact on the brand.

     

    This year may be rough with charges due to the data breach and increased investments in security but if TGT were to hit $55 it would be trading at a 2.15 P/BV ratio versus 2.61 for the S&P 500. This seems cheap considering from 2011-2013 TGT posted an ROE each year above 18% versus the S&P average of under 15% over the same time period. Also, at $55 you could pick up a stock with an excellent history of increasing dividends at a 3.1% dividend yield. I will use any large sell-off from here to add to my position.
    15 May, 03:43 PM Reply Like
  • Bob 88
    , contributor
    Comments (50) | Send Message
     
    In this stormy market, people would rather hold on the cash. Would you really want to risk your hard earned money for the Target shares? Please notice that the overall retail sector is not performing and even worst is that Target has tons of uncertainties built in. Remember there are numerous other solid companies with good dividends out there. Please realize that Target is not a shady, but a very shaky tree in this jungle.
    15 May, 08:02 PM Reply Like
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