Target (TGT) Stock Gains After Doubling Share Buyback Program to $10 Billion, Increasing Dividend

NEW YORK (TheStreet) -- Target (TGT) shares are up 0.87% to $79.59 in early market trading on Wednesday after the retailer confirmed that it is doubling its stock buyback program to $10 billion and raising its quarterly dividend by 7.7%.

The company had placed a press release announcing the increases on its website early Tuesday but removed the announcement shortly afterwards saying that the announcement was premature because its board of directors had not officially approved the measures.

The company raised its quarterly dividend to 56 cents per share from 52 cents per share payable September 10 to shareholders of record on August 19.

The news comes as the company holds its annual shareholders meeting today in San Francisco.

"Given our outlook for capital expenditures and the strong cash generation of our core business, we expect to have the capacity to increase our annual dividend and repurchase billions of dollars of Target shares annually while maintaining our current credit ratings," said CFO John Mulligan.

Target is a core holding of Jim Cramer's Action Alerts PLUS charitable trust. Here is what Cramer had to say about today's news.

"I can't believe how quickly this balance sheet has built up in quality given the huge charge from closing Canada. TGT remains a very big position for AAPLUS because of these pro-shareholder actions."

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 multiple strengths, 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, growth in earnings per share and increase in net income. We feel its 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 1.8%. Since the same quarter one year prior, revenues slightly increased by 2.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.90, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 39.83% over the past year, a rise that has exceeded that of the S&P 500 Index. 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 has improved earnings per share by 13.5% 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 $3.83 versus $3.07 in the prior year. This year, the market expects an improvement in earnings ($4.63 versus $3.83).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Multiline Retail industry. The net income increased by 51.9% when compared to the same quarter one year prior, rising from $418.00 million to $635.00 million.
  • You can view the full analysis from the report here: TGT Ratings Report

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