Diamonds and Dogs

11/16/16

Target (TGT) is back on target.  After an up and down year, Target is jumping 7% to a six month high on better than expected earnings. The big-box retailer's adjusted EPS jumped 21% to $1.04 vs. forecasts for a 3.5% dip, while revenue slipped 6.7% to $16.44 billion, better than views for $16.34 billion. Same-store sales dipped 0.2%, while digital sales grew 26%. The chain has been scrambling to boost its e-commerce capabilities to better compete against Amazon. For the fourth quarter, Target provided a wide range for earnings of $1.55-$1.75, which have the potential to easily beat estimates.

Lowes (LOW) is trading lower. Following better than expected earnings from Home Depot this week, Lowes dropped 3% not far from a 52 week low after reporting disappointing numbers missing earnings estimates by 9 cents while revenue numbers also missed. The company's guidance for 2017 was even worse lowering earnings estimates to $3.52 from $4.06 a share. Management said operating results were below thier expectations due to slower sales in the first two months of the quarter. Higher interest rates in the last two weeks won't help business going forward either.