Why Target Corporation (TGT), Lowe’s Companies, Inc. (LOW) and Staples, Inc. (SPLS) Are 3 of Today’s Worst Stocks

Advertisement

Although it was anything but decided and elegant, the market managed to fight its way back into the black today with some help from the minutes of the most recent Federal Open Market Committee meeting. The S&P 500‘s close of 2182.22 was 0.19% better than Tuesday’s close, with the bulk of the upside coming in the latter portion of the trading session.

Why Target Corporation (TGT), Lowe's Companies, Inc. (LOW) and Staples, Inc. (SPLS) Are 3 of Today's Worst StocksNot every name escaped Wednesday unscathed though. The day was particularly tough on retailers Lowe’s Companies, Inc. (NYSE:LOW), Staples, Inc. (NASDAQ:SPLS) and Target Corporation (NYSE:TGT).

Here’s what went wrong for each.

Lowe’s Companies, Inc. (LOW)

The good news is that home-improvement retailer Lowe’s Companies is benefiting from the ongoing strengthening of the real estate market. The bad news is that it’s not doing it as well as rival Home Depot Inc (NYSE:HD) is, and disappointed LOW shareholders voiced their disapproval in the form of a near-6% selloff of Lowe’s shares.

Last quarter — the company’s second fiscal quarter of the year — Lowe’s earned $1.37 per share on sales of $18.26 billion. Both compare favorably to year-ago figures of a profit of $1.20 per share of LOW and revenue of $17.35 billion. Analysts, however, were looking for a bottom line of $1.42 per share and sales of $18.45 billion.

The even bigger problem is that investors couldn’t get past the fact that Home Depot’s second quarter numbers were measurably better. Between that and its lowered 2016 profit guidance (from $4.11 per share to $4.06), LOW was too easy to dump.

Staples, Inc. (SPLS)

Still struggling with Amazon.com, Inc. (NASDAQ:AMZN) as a competitor in the office supply space and still reeling from the Department of Justice’s decision to not let it merge with Office Depot Inc (NASDAQ:ODP), Staples shares were sent almost 7% lower today after reporting second-quarter earnings that were (unfortunately) in line with estimates and then suggesting its turnaround effort wasn’t getting as much traction as initially hoped.

Last quarter, Staples earned an operating profit of 12 cents per share on revenue of $4.8 billion; analysts were calling for revenue of $4.75 billion and a profit of 12 cents per share of SPLS stock.

The selloff was mostly spurred, however, by the retailer’s third-quarter guidance. The company anticipates reporting a profit of between 32 and 35 cents per share of SPLS for the quarter currently underway, versus an average analyst estimate of 35 cents. Staples earned 35 cents per share in the same quarter a year ago.

Target Corporation (TGT)

Lowe’s wasn’t the only retailer to get hit hard by a lackluster second quarter and a similarly disappointing revision to its full-year outlook. Target also posted concerning Q2 numbers and 2016 guidance today.

The struggling company earned $1.23 per share on $16.17 billion in sales. The bottom line topped estimates of $1.12, and sales met estimates. Nevertheless, revenues were down 8% on a year-over-year basis, and earnings per share of TGT stock only grew by the penny they did thanks to the company’s ongoing stock-repurchase program.

Looking ahead, Target lowered its 2016 profit guidance from a range of $5.20 to $5.40 to a range of between $4.80 and $5.20. For the current quarter it’s only expecting to report a profit of between 75 cents and 95 cents per share, versus an average analyst estimate of 95 cents.

TGT ended the day down 6%.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2016/08/why-target-corporation-tgt-lowes-companies-inc-low-and-staples-inc-spls-are-3-of-todays-worst-stocks/.

©2024 InvestorPlace Media, LLC