NEW YORK (TheStreet) -- Shares of Target Corp. (TGT - Get Report) are slightly lower in pre-market trade after the proxy advisory firm Institutional Shareholder Services recommended that Target shareholders vote against seven of the company's 10 directors, saying the board failed to manage risks that led to a massive data breach, Reuters reports.
ISS blamed Target's audit and corporate responsibility committees, which oversee risks such as fraud, for being "inadequately prepared" for risks of doing business in electronic commerce, Reuters noted.
TheStreet Ratings team rates TARGET CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate TARGET CORP (TGT) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 8.4%. Since the same quarter one year prior, revenues slightly increased by 2.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.85, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- TARGET CORP's earnings per share declined by 14.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, TARGET CORP reported lower earnings of $3.07 versus $4.53 in the prior year. This year, the market expects an improvement in earnings ($3.70 versus $3.07).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Multiline Retail industry. The net income has decreased by 16.1% when compared to the same quarter one year ago, dropping from $498.00 million to $418.00 million.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, TGT has underperformed the S&P 500 Index, declining 18.15% from its price level of one year ago. Despite the decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.
- You can view the full analysis from the report here: TGT Ratings Report