On May 29, 2013, Zacks Investment Research downgraded Target Corporation (TGT - Analyst Report) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
Target has been witnessing sharp downward estimate revisions after the company reported disappointing first-quarter fiscal 2013 results that prompted management to take a conservative stance on its future earnings.
This operator of general merchandise and food discount stores in the United States declared its results on May 22, 2013, wherein earnings, including U.S. and Canadian operations, came in at 81 cents a share that dipped from $1.03 reported in the prior-year quarter.
Target’s adjusted earnings of $1.05 per share also dropped from $1.11 delivered in the year-ago quarter. This relates to results from U.S. operations only. However, it managed to exceed the Zacks Consensus Estimate of 85 cents.
Nevertheless, the bottom-line results came below Target’s earlier projection of $1.10 to $1.20 per share due to lower-than-anticipated sales witnessed principally in apparel and other seasonal and weather-related categories. Total revenue edged down 1% to $16,706 million from the prior-year quarter, and also came below the Zacks Consensus Estimate of $16,897 million.
Following soft first-quarter results, Target now projects fiscal 2013 earnings between $4.70 and $4.90 per share down from a range of $4.85 to $5.05 forecasted earlier.
Consequently, we are witnessing a fall in the Zacks Consensus Estimate. The Zacks Consensus Estimate for the second and third quarters of fiscal 2013 dropped 8.7% and 3.3%, to 95 cents and 88 cents a share, respectively, over the past 30 days.
Moreover, the Zacks Consensus Estimate for fiscal 2013 fell by 2.2% to $4.39 and for 2014 it tumbled by 1.8% to $5.45 per share, over the same time frame.
Other Stocks to Consider
Not all stocks in non-food retail, wholesale sector are performing as disappointingly as Target. Other stocks worth considering include Flowers Foods, Inc. (FLO - Snapshot Report) and Bon-Ton Stores Inc. , both of which hold a Zacks Rank #1 (Strong Buy), and J&J Snack Foods Corp. (JJSF - Snapshot Report) carries a Zacks Rank #2 (Buy).