Target Stock

Word has come down that preisdent and CEO Gregg Steinhafel will add the additional role as Chairman of the Board of Directors to his other roles at Target.  Target stock is down today, along with the rest of the market, though significantly more so.  The management announcement was made on a non-market day, January 19th, off for the MLK holiday.

Despite a lickin last week and little signs of an upswing this week, Target stock is still up 1.19% this year.  Of little solace after that beating we took last year.  The forward p/e ratio remains at about 15, which isn’t all that attractive, I have to admit.  I’d be looking for 12 or so.

Target stock got slammed today along with the market on the jobless unemployment news.  Certainly, disposable income for American families has a direct impact on sales at Target stores.  January $35 options lost over half of their value with the premium down to $1.43.  You’d need a 3% move up to get back in the money.

Target stock jumped 4.36% today on low volume, but on a day that saw the Dow down nearly a percent.  The stock is up over 11.5% in the past five days, which includes an off day for New Year’s.

Bloomberg recently published an article entitled Wal-Mart Set to Repeat Share Gains, Grab Target Sales. I’m not all that sure that I agree with this, but Wal-Mart had a pretty banner year in 2008 compared to the rest of the retail establishment, I guess that’s what you invest in Wal-Mart for, though.  Nevertheless, I see a resurgence in Target this coming year.  Also despite being competitors I am not sure a dollar lost in Target means a dollar gained in Wal-Mart, necessarily.

Beginning the week of December 28th, Target stock was trading down over 35%.  The company has distributed $.60 in dividends per share this year.  Currently the company is worth just under $25 billion.  It is trading at less than 10 times price-to-earnings (trailing) and it is estimated that the the forward P/E is just over 15.

Parents shopping for Playstation 3 games at retailer Target this Christmas season will get a nice surprise.  The discount retailer has cut its prices on Electronic Arts games to $47.  This actually now will also include titles from Microsoft XBox as well.  These discounts may prove to be profitable ‘loss leaders’ for the store and help boost Target stock.  On the other hand, it could be further evidence of a company willing to slash prices to move product.

Know Target’s company logo?  Much like that, Target stock appears to have a giant red bullseye on its back, facing threats from reinvigorated department store rivals. Target has been forced to play catch up lately with the reigning retail champ and competitor Wal-Mart on new initiatives such as discount prescription drugs and organic food. Walmart may turn its inventory over faster bringing in faster profits but the two companies carry a lot of different inventory. Everybody likes China but the two companies. Photobucket Nice return there for 3 months, especially in the company’s on solid footing and should continue to boost that dividend payout. Boy was I right there to buy Best Buy and short Circuit City from October through December in that pairs trade. Prudential’s Rowen said it’s reasonable to expect that Target could trade for any valuation investors are willing to buy Best Buy vs. Looking at next year, the stock trades at about 15 times estimates but Sears trades at about 16 times and Kohl’s has a price-to-earnings ratio just above 18. And just like its company logo, Target appears to have a giant red bulls eye on its back, facing threats from reinvigorated department store rivals.

Target Stock saw heavy action today as the equity boomed nearly 10 percent on heavy volume.  While the Dow was also up today, it was outperformed by nearly 3x by TGT today.  Not much news, but Zack’s did pan the stock based on its recent sss numbers.  “The retail chain has been losing market share to more aggressive discounters.”

In November, Target stores saw a decrease in sales of just over 6 percent.  Same-store-sales dropped over 10%, worse than guidance of declines of 6-9 percent.  The big question for Taget stock will be the impact of holiday sales, one way or another.  Of course investors are hoping for a better than expected season, while assuming a poor season will occur either way.