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Strategies & Market Trends : Young and Older Folk Portfolio
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From: chowder8/9/2022 3:19:08 PM
2 Recommendations

Recommended By
INCOGNIT0$
Menominee

   of 21904
 
'Next man up' in the Middle Age Portfolio is - Target (TGT).

Target next reports on August 17, with Wall Street eyeing earnings per share of $0.72 on revenue of $26.08 billion. That would be a significant year-over-year decline in earnings, but a small increase in revenue.

According to earnings numbers compiled by MarketBeat, the most recent quarter marked the first time since November 2018 that Target missed earnings views.

It's worth noting: The unofficial "whisper number" for Target hovers below the official expectations. The whisper number represents a forecast that some analysts truly believe, but don't publish.

I have spoken about whisper numbers in the past, at one time there used to be a web site that posted all whisper numbers but Wall Street didn't like that. The site is gone.

Anyway, a lot of the questions around here about why certain companies didn't react the way we expected them to react after earnings is because of the whisper numbers.

What this means is that TGT can miss on earnings and see the price jump if the numbers are better than the whisper numbers. If TGT misses the whisper numbers, then the price decline might be rather steep.

In any event, I'll be adding to TGT next and the question I haven't answered yet is whether I front run earnings or wait until the announcement and then see the reaction. I have a couple of days to think about it.

VALUATIONS:

TGT seems to be fairly valued. When using a DCF Model I get the following intrinsic values.

If using the Base Rate, fair value is $197.33 which makes TGT selling at a 16% discount to fair value.

If using the Bear Rate, fair value is $151.27 which makes it selling at an 8% premium to fair value.

Morningstar and CFRA have fair value between the Base Rate and the Bear Rate.

Morningstar says FV is $166.00. -- CFRA says FV is $168.93 which makes TGT selling at a discount to FV according to both firms.
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