Three Risks Facing Target Corporation (TGT) Stock

Page 1 of 2

I absolutely love Form 10-Ks, which most publicly traded companies are required by law to file every year with the SEC to provide a comprehensive summary of their businesses. Like an unsung hero of the financial world, 10-Ks give investors a chance to look through all the smoke and mirrors for a real glimpse of how their companies are doing.

Most notably, it’s worth perusing the “Risk Factors” section of any given 10-K. Just like it sounds, this block contains a comprehensive list of any significant risks currently facing the subject company.


Source: Target.com (NYSE:TGT).

Take Target Corporation (NYSE:TGT), for example, which has proven a tremendous investment in a solid long-term business, as the company has effectively managed many of its risks over the years. In fact, Target Corporation (NYSE:TGT) stock has not only risen more than tenfold over the past 20 years, but Target has also been able to raise its dividend 41 times in the nearly 46 years since its 1967 IPO.

Even still, Target Corporation (NYSE:TGT)’s most recent 10-K lists a total of 17 risk factors that could put the business in jeopardy. Let’s dig in, then, to explore three of the most significant of those risks facing Target stock today:

1. “If we are unable to successfully develop and maintain a relevant and reliable multichannel experience for our guests, our reputation and results of operations could be adversely affected.”
To be sure, Target Corporation (NYSE:TGT) is in the middle of a technological revolution, forcing it to make the most of not just its brick-and-mortar stores, but also to draw more business through online channels to compete with Internet-only behemoths like former partner Amazon.com, Inc. (NASDAQ:AMZN). As a result, Target must both maintain an edge with its traditional and mobile websites and manage customer perceptions through social media outlets like Facebook Inc (NASDAQ:FB) and Twitter.

Of course, Target Corporation (NYSE:TGT) certainly isn’t alone in this struggle; fellow Fool Rick Munarriz recently wondered whether Amazon’s showrooming effect may finally be hurting both Target and Wal-Mart Stores, Inc. (NYSE:WMT), especially after Target Corporation (NYSE:TGT) stock fell hard recently on weaker-than-expected quarterly results, hurt by a 0.6% decline in same-store sales. Wal-Mart, however, fared even worse by missing expectations on both its top and bottom lines on a 1.2% decline in comparable-store sales.

Meanwhile, last quarter Amazon.com, Inc. (NASDAQ:AMZN) managed to grow revenue by 22% year over year. Of course, Amazon is also developing multiple revenue streams, so not all of that growth came from its retail operations. What’s more, fellow Fool Travis Hoium recently pointed out that Wal-Mart Stores, Inc. (NYSE:WMT) and Target still have an edge — for now, anyway — while Amazon.com, Inc. (NASDAQ:AMZN) currently can’t match their ability to cater to errand-runners for essential items like milk, toilet paper, and produce.

2. “Our earnings are highly susceptible to the state of macroeconomic conditions and consumer confidence in the United States.”
At the end of 2012, all of Target’s 1,778 retail stores were located in the United States. By comparison, Wal-Mart Stores, Inc. (NYSE:WMT) currently operates more than 10,800 retail units spread across 27 countries.

Let it suffice to say, then, that both the state of the domestic economy and U.S. consumer confidence are massively important to determining whether Target stock can continue to outperform.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!