Target (TGT) Stock Gains After Commercial Furnishing Business Sale

NEW YORK (TheStreet) -- Target (TGT) shares are up 0.76% to $77.85 in afternoon trading on Friday after the retailer announced that it is selling its Target Commercial Interiors commercial furnishing business to Minneapolis, MN-based Omni Workplace for an undisclosed amount.

The sale is the latest wrinkle of the retailer's previously announced restructuring plan to get leaner by focusing on its core businesses while getting rid of outside projects that are no longer ancillary to the company's future growth.

"Target is continuing to drive our transformation by focusing on our core businesses and putting our guests at the center of everything we do. Target Commercial Interiors has a rich history and a great track record with clients, but its business model is tailored to commercial customers. The decision to exit a business is always difficult, but we are thrilled that TCI will remain in Minneapolis," said CFO John Mulligan.

Target is a holding of Jim Cramer's Action Alerts PLUS Charitable Trust. He had this to say about the company's plan:

This company reports next week and I like the risk-reward ahead of the announcement simply because the stock's come down so hard in sync with the disappointing numbers from Kohl's (KSS). I would buy some stock ahead of the quarter and more after if it goes down as I am a long-term believer in CEO Brian Cornell's vision for the once-great chain.

TheStreet Ratings team rates TARGET CORP as a Buy with a ratings score of A-. TheStreet Ratings team has this to say about their recommendation:

"We rate TARGET CORP (TGT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, revenue growth, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 83.95% and other important driving factors, this stock has surged by 37.81% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • TARGET CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, TARGET CORP increased its bottom line by earning $3.84 versus $3.07 in the prior year. This year, the market expects an improvement in earnings ($4.55 versus $3.84).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 2.1%. Since the same quarter one year prior, revenues slightly increased by 1.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $2,389.00 million or 35.20% when compared to the same quarter last year. In addition, TARGET CORP has also modestly surpassed the industry average cash flow growth rate of 26.02%.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Multiline Retail industry and the overall market on the basis of return on equity, TARGET CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • You can view the full analysis from the report here: TGT Ratings Report

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