(TGT) Target Corporation – Value-Oriented Consumer Approach

October 16th, 2009

Target Corp. (TGT) is jumping higher as the company benefits from its value oriented consumer approach and a resurgence in consumer confidence.

Company Description

Target operates as a general merchandise and food discount store in the united States. The company was founded in 1902, operates more than 1,650 stores and has a market cap of $38 billion.

Shares of TGT have more than doubled over the last 6 months, rallying with the market on growing consumer confidence and better than expected second-quarter results, reported on Aug 18.

Second-Quarter Results

Sales were down a marginal 2.7% from last year to $14.6 billion, but earnings came in better than expected at 79 cents per share, 13 cents ahead of the Zacks Consensus Estimate.

Gross margin improved to 31.9% from 31.2% while selling, general and administrative costs were down .4%, a reflection of the company’s attempts to become more efficient in a tough market. Target also added that its net write offs were $304 million in the quarter, in line with expectations with over $1 billion remaining for projected future write offs.

Estimates

Over the last 2 months, the current-year estimate is up 22 cents to $3.08 per share. The next-year estimate is pegged at $3.46, a solid 12.5% growth projection.

Valuation

Based on the current-year estimate, this stock has a P/E multiple of 16X, a slight discount to the overall market.

The Chart

Shares of TGT have posted big gains over the last 6 months, more than doubling in price after bottoming out in early March. Take a look below.


Zacks Investment Research
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More on this topic (What's this?)
PTF (perusing the filings) (TGT) (AlphaNinja, 8/11/09)
The Old ‘We’ll Make It Up on Volume’ Fail? (XRT, TGT, KSS, JCP) (Wall Street Sector Selector, 1/5/12)
Target Corp. Increases Dividend 6% (Disciplined Approach to Investing, 6/11/09)
Bill Ackman's Pershing Square Reduces Target (TGT) Position (market folly, 8/12/09)
Read more on Target at Wikinvest

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