Dividend.com: Lower-Moving Target

Target Misses the Mark on Fourth-Quarter Earnings

Popular retailer Target (TGT Quote) said Tuesday that its fourth-quarter profit declined 41% over the same period during the previous year.

The company said that its fiscal fourth-quarter net income was $609 million, or 81 cents per share, compared with $1.028 billion, or $1.23 per share, in the year-ago period.

On average, analysts expected profit of 83 cents per share.

Target said that quarterly sales declined 1.6% year over year, from $19.3 billion to $19 billion. Same-store sales, or sales from stores open at least one year, dropped 5.9%. Same-store sales are considered a key indicator of a retailer's health.

The company's earnings were hurt by losses from its Target credit card division, which reported a pretax loss of $135 million, compared with profit of $189 million in the year-ago period. The company blamed the loss on a $245 million addition to the allowance for doubtful accounts, as more of its credit customers defaulted on their credit card bills.

We have avoided shares of Target since our early June coverage began, when the stock was trading at $52.52. The company has a 2.25% dividend yield, based on last night's closing stock price of $28.43.

The stock has technical support around the $18 level. If the shares can rebound, we see overhead resistance around the $38 to $41 price level. We would remain on the sidelines for now.

Target is not recommended at this time, holding a Dividend.com Rating of 3.0 out of 5 stars.