Investors need to pay close attention to all companies that report earnings, particularly the less “popular” companies. I believe that the companies I have listed here fall into that category and do not receive the level of attention that is deserved. The stock market is composed of thousands of companies, and one of the keys for investors to succeed is to unlock hidden value that is unknown to the masses.
You likely shop here, but have you considered an investment?
Target Corporation (NYSE:TGT) reported Q1 EPS of $0.77 against a consensus of $0.87. The company also reduced fiscal year 2013 EPS to a range of $4.70-$4.90 from the previous range of $4.85-$5.05. Management lowered the guidance in mid-April, but the company still missed on the bottom line, resulting in a pullback in the stock which was trading near 52-week highs prior to earnings. The dip in share prices following the earnings was a clear buying opportunity, and today, the stock is trading at fresh 52-week highs.
Same store sales miss, but not a concern.
Same store sales dropped 0.6%, as a 1.9% decrease in store traffic was offset by a 1.3% increase in average ticket. Much of the weakness could be attributed to weather related factors, so investors shouldn’t concern themselves with data. Looking forward to 2Q, the company can benefit from new merchandising programs (Nate Berkus, todd Oldham) along with the continued success and expansion of P-Fresh, and the company’s 5% rewards program should all contribute to a better 2Q bottom line.
Target Corporation (NYSE:TGT)’s aggressive expansion in Canada has already yielded $86 million in sales, and the mix of sales was skewed towards higher-margin apparel and home products. Gross margin in Canada was 38.6% compared to 30.7% in the U.S. Target Corporation (NYSE:TGT) had a limited number of stores (24 to be exact) that were open for about half of the quarter. With a planned expansion to 124 stores across Canada by the end of the year, higher margin sales will continue driving profits for years to come.
Management committed towards share price.
In the quarter, management repurchased approximately 8.5 million shares, for a total cost of $547 million. Management also reaffirmed prior guidance issued in February for more than $2 billion in share repurchases during the year. The company also distributed $232 million in dividends to shareholders during the quarter.