We continue monitoring earnings reports from the Retail Sector today with giant online and brick and mortar chain Target the latest to report. Target's numbers came in fairly well, with some key metrics reaching the upper end of estimates.

The company reported third quarter 2015 adjusted earnings per share from continuing operations (Adjusted EPS) of $0.86, up 8.6 percent from $0.79 in 2014. GAAP EPS from continuing operations was $0.76, compared with $0.82 in third quarter 2014, reflecting asset-impairment, data breach and restructuring expenses that were excluded from Adjusted EPS. Third Quarter GAAP EPS was $0.87, compared with $0.55 last year, as this year’s results reflect $0.11 of tax benefits related to investment losses in Canada, compared with $0.27 of after-tax losses related to Canadian operations in last year’s results.

Brian Cornell, chairman and CEO, told investors that Target is

pleased with our third quarter financial results, as both sales and adjusted earnings per share were near the upper end of our expectations. The third quarter marked the fourth consecutive quarter in which we have grown traffic, and Target’s sales growth continues to be led by our signature categories: Style, Baby, Kids and Wellness. Our momentum is encouraging, especially in the face of stiffer prior-year comparisons. Our results highlight the benefit of a consistent, company-wide focus on our key strategic priorities, and that focus will continue to position Target well in the months and years ahead. As we look forward to the fourth quarter, our team is focused on strong execution throughout the holidays, and we are confident in our merchandising and marketing plans as we enter the most critical season of the year.

As we noted yesterday when discussing Home Depot, some retailers--such as Macy's and Nordstrom--are posting poor results this quarter. But so far retailers focused on home improvement and those focused on value-seeking consumers-like Target and Wal Mart--have not had trouble meeting guidance and estimates.

It's not all rosy, however. As today's Wall Street Journal notes, Target performed poorly in some categories, like winter apparel and coats. Blame climate change--or just "weather"--higher temperatures across much of the nation meant lower sales.

And, Target also failed to meet goals in digital sales. They are pushing hard for a bigger online presence for Black Friday, Cyber Monday, etc. They will offer free shipping for Christmas and will also make in-store Black Friday deals available for those shopping at home.

Like Home Depot, Target updated its guidance to reflect Q3's good news. The Company now expects full-year 2015 Adjusted EPS of $4.65 to $4.75--compared with prior guidance of $4.60 to $4.75.

Below is today's data on Target:

Target Corporation (TGT) operates large-format general merchandise and food discount stores in the United States, which include Target and SuperTarget stores. They offer both everyday essentials and fashionable, differentiated merchandise at exceptional prices. Their ability to deliver a shopping experience that is preferred by their guests is supported by their strong supply chain and technology infrastructure. They operate as a single business segment. Their credit card operations represent an integral component of their core retail business. They also operate a fully integrated online business, Target.com. Although Target.com is small relative to their overall size, its sales are growing at a much more rapid pace than their in-store sales, and it provides important benefits to their stores and credit card operations.

VALUENGINE RECOMMENDATION: ValuEngine continues its BUY recommendation on TARGET CORP for 2015-11-17. Based on the information we have gathered and our resulting research, we feel that TARGET CORP has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE Company Size and Momentum.

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