Stocks Are Down and TGT’s CEO Is Out

The stock market is down this morning. The S&P 500 is currently at 1,868 which is a pullback of about 0.7%.

Interesting news out of Target ($TGT). CEO Gregg Steinhafel has resigned due to the data security breach issue. Even though the story broke five months ago, the fallout has continued.

As a business, I like Target a lot and I think it could be a good buy. However, I’m not confident enough to say that it’s a flat-out buy. Earnings last year were terrible, especially for Q4. Just because a stock is down doesn’t mean it’s cheap; it’s only cheap relative to where it was.

The current estimate for this year is $4.03 per share which would still be less than the profit from three years ago. Ideally, I’d like to see TGT trade a lot lower before I felt comfortable saying the price was favorable.

Shares of Tyson Foods ($TSN) have been on fire this year, but the stock is down about 7% this morning after the country’s largest meat producer missed earnings by three cents per share. Earnings were actually very strong compared with one year ago (60 cents versus 36 cents). What’s interesting about TSN’s earnings report is that it topped sales estimates thanks to higher prices for beef and pork.

From Bloomberg:

The wholesale price of pork has jumped 35 percent this year after a piglet-killing virus curbed domestic supply. Beef is 14 higher percent as drought and high feed costs shrink the U.S. cattle herd.

More than 5,000 cases of the virus have been reported with it spreading to at least 27 states, according to the National Animal Health Laboratory Network. U.S. production may drop the most in three decades this year, Rabobank International has estimated.

Tyson said it sees full-year earnings of $2.78 per share, so the lower stock price is 14.3 times that.

Posted by on May 5th, 2014 at 10:08 am


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