Someone issue a warning for all the target (NYSE: TGT - News) security guards: the rising prices have it out for the giant food and retail sale, and they could strike at any time. In fact, scratch this memo; It appears to be rising prices have already done their dirty work, as evidenced by quarterly report yesterday.
Off the coast of the mark
Just where we thought that we did with the excuse that are rising and fresh fuel food enters the net profits, we're dragged in reality $100 oil and fresh food at highs decadal. The target quarterly figures reflects the struggle of this plant in detail against the rapid rise of entrance fees.
For the quarter, the company reported a modest 2.2% increase in revenues, $ 15.9 billion, and the net result is an increase of 2.7%. The company was able to transform in a jump of 10% per sharing of profits, to $0.99 of the period of the year - ago. Although profits sailed beyond the expectations of consensus of $0.94, missed the mark by about 85 million dollars of revenue.
Investors promptly responded intimidating stock target in an inch of its low of 52 weeks on mixed results. But could investors have jumped the gun and missed keynotes distributed on the rise of this report? I think so...
Call to all Robin Hoods
The most optimistic aspect of the report of the target is the health of its credit card division, which is also in part by jpmorgan Chase (NYSE: JPM - News). Despite the witnesses of a 18.3% income credit card tumble, profits in the segment of the U.S. credit jumped considerably from $ 111 million - in the period of the year there are 194 million. Why the jump? Improving the quality of customer credit target. Bad bad loans dropped to a mere of $ 12 million this quarter to an exorbitant sum of $ 197 million last year.
Also, discount that store reward cards have on the target consumer base. Total business credit card penetration rose 1.5 5.9% percentage point, while its REDcard penetration rose from 4.9% to 7.6% year. This is important for three reasons:
First, map more that consumers use a target credit, rights and less target is paying Visa (NYSE: V - News), Mastercard (NYSE: MA - News), and american Express (NYSE: AXP - News) for the use of third party card. Second, Rewards cards generate loyal customers and make it less likely that consumers will opt for shopping at rivals wal-mart (NYSE: WMT - News) or Costco (Nasdaq: cost - News). Finally, reward cards follow shoppers spending patterns, which makes it much more likely that the target will have the right combination of products for customers and reduce the likelihood of a glut of inventory.
Bullseye targets
Fresh input can be increased, but target looks well positioned for the future. Improving the credit quality of its customers, and its penetration of the rewards program has taken off. In a country of razor-thin margins, target seems the graphics to develop its business considerably faster than Wal-Mart and Costco. It is perhaps time to add the target to my own watchlist now that the PEG ratio the company hovering approximately 1 and P/E before its derived below 11.
Target deserves a place on your list of tracking or in your wallet? Sound off in the comments section below and examine the target tracking and its closest rivals Wal-Mart and Costco with the My Watchlist free and easy to use.
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