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Big Earnings News This Week…

I’ll cover the following topics:

1. The Target Stock Crash Explained - TGT Stock Analysis

2. Kevin O’Leary Loves Dividend Stocks

Let’s do this!

The Key Story

Target's Stock Plummets After Q3 Earnings: Is This a Buying Opportunity?

Target just reported their Q3 earnings, and the market reaction was harsh. The stock plunged by over 21% in a single day—the worst one-day decline since May 2022.

So, what happened?

• Revenue came in at $22.67 billion, 0.9% below expectations.

• Earnings per share were $1.85, which is 19.57% below expectations.

Why?

• Despite healthy traffic growth of 2.4% year-over-year—adding over 10 million transactions—the average ticket size declined.

• Target found that consumers are shopping cautiously, especially in discretionary categories like apparel and home, which make up about one-third of Target's total revenue. This hurt profitability.

Earnings per share declined 11.9% compared to the prior year. Looking ahead, Target is cautious about Q4, expecting comparable sales to be flat and full-year EPS between $8.30 and $8.90, down from previous analyst projections of $9.56.

Buy, Hold, Sell?

With the stock price drop, Target's PE ratio is now around 13.5, which might make it a potential long-term value play. The dividend yield has risen to 3.7%, but dividend growth is slowing significantly.

I conducted a discounted cash flow analysis, with multiple estimates, suggesting it could be undervalued. Also, Wall Street analysts have a mean price target of $173.82, implying sizeable upside.

While I don't currently own Target stock, the recent sell-off makes it more intriguing. There could be substantial upside in the coming years if Target can navigate its current challenges and return to earnings growth.

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Final Call: Invest in RYSE Before the Round Ends!

Investing Theory

Why Kevin O’Leary Loves Dividend Stocks

I recently delved into Kevin O'Leary's passionate case for focusing on dividend-paying stocks. Known for his role on the hit show "Shark Tank", Kevin is an incredibly successful investor worth over $400 million.

Here are the highlights:

• Kevin's investment philosophy centers on the importance of free cash flow. He believes that the only reason to own a stock is its ability to generate incremental cash flow, which in turn allows for consistent dividend payments.

• He emphasizes that over the last 40 years, 71% of the market's returns have come from dividends, not capital appreciation. Kevin argues that companies without dividends are often more volatile and lack the cushion that yield provides.

• Kevin's conservative approach involves rigorous testing of a company's balance sheet to ensure its viability in generating cash. He avoids chasing hot stocks or new IPOs, preferring investments that have demonstrated consistent performance over multiple years.

In summary, Kevin O'Leary's investment strategy aligns closely with the principles of dividend growth investing. His emphasis on free cash flow, dividend payouts, and long-term value creation reinforces the importance of focusing on quality companies that return capital to shareholders.

Thanks for the read! Let me know what you thought by replying back to this email.

— Zach

Disclaimer: Dividend Dividend (Dividend Data LLC) is not a professional financial service. All materials released from Dividend Data (Dividend Data LLC) are for educational and entertainment purposes. Dividend Data (Dividend Data LLC) is not a replacement for a professional's opinion. Contributors to the Dividend Data (Dividend Data LLC) might have equities mentioned in the newsletter