) has been in troubled waters, ever since it saw its worst
security breach ever, which affected 70 million customers and
subsequently led to the trimming of the earnings guidance. This
Zacks Rank #5 (Strong Sell) stock has lost much of its momentum
with shares crashing to a 52-week low of $57.38 yesterday.
Since the announcement of the breach, Target has lost 7.1% of its
market capitalization. The average volume of shares traded over
the last 3 months was approximately 5,964K. Moreover, the company
currently trades at a forward P/E of 18.20x, a 1.9% discount to
the peer group average of 18.56x. The long-term estimated
earnings per share (EPS) growth rate is 9.2% compared with its
peers group average of 11.9%.
Target faced its worst security breach when information related
to credit and debit card holders were hacked. The theft occurred
during the holiday season, from a day before Thanksgiving up to
Dec 15. The company publicly recognized the breach four days
later on Dec 19, 2013. Recently, as part of the ongoing inquiry,
Target had disclosed that the data theft included names, mailing
and email addresses as well as phone numbers.
As a result, Target trimmed its fourth-quarter fiscal 2013
guidance and now expects adjusted earnings per share for its U.S.
segment in the range of $1.20 to $1.30, compared with the
previous projection of $1.50 to $1.60. Further, comparable-store
sales are expected to decline 2.5% in the fourth quarter as
against flat comps forecasted earlier.
Moreover, Target, as per media reports, has been slapped with
several lawsuits over the security breach in the past few days,
which have intensified its legal woes. We feel that more troubles
could be looming ahead for Target.
Recently, media reports also suggested that Target is dismissing
475 employees worldwide and will no longer fill up about 700
vacant positions to reduce costs. Earlier,
Wal-Mart Stores Inc
J. C. Penney Co., Inc.
) had announced layoffs as part of their cost-cutting
We believe that Target will take some time to regain the
confidence of customers. Notably, the company has extended help
to aggrieved customers by offering one year of complimentary
credit monitoring and identity theft safeguard. Target's
customers have three months to register for the program. At the
same time, it is improvising the security system to avoid such
reoccurrences in the future.
PENNEY (JC) INC (JCP): Free Stock Analysis
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