NEW YORK (TheStreet) -- Shares of Target (TGT) - Get Report are jumping, up 3.32% to $76.80 in early market trading on Thursday, after the company announced plans to discontinue Canadian operations through its indirect wholly-owned subsidiary, Target Canada.
Target said it expects to report about $5.4 billion in pretax losses for the fourth quarter, mostly due to the writedown of the Canadian investment as well as exit costs and operating losses, CNBC reports.
This morning Target Canada filed an application for protection under the companies' Creditors Arrangement Act with the Ontario Superior Court of Justice in Toronto.
The company says the closing of Target Canada will lead to an increase its earnings in fiscal 2015 and beyond, as well as boost cash flow starting in fiscal 2016.
Target Canada currently has 133 stores across the country and about 17,600 employees.
Separately, 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, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, increase in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TGT's revenue growth has slightly outpaced the industry average of 3.8%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.87, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- The net income growth from the same quarter one year ago has exceeded that of the Multiline Retail industry average, but is less than that of the S&P 500. The net income increased by 2.9% when compared to the same quarter one year prior, going from $341.00 million to $351.00 million.
- TARGET CORP's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in 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 ($3.25 versus $3.07).
- You can view the full analysis from the report here: TGT Ratings Report