Target Corporation (TGT: $71/share) – Closing Long Position – down 13% vs. S&P up 24%

Target Corporation was originally selected as a Long Idea on 4/28/15 and reiterated on 1/3/17. At the time of the report, the stock received an Attractive rating. Our investment thesis highlighted strong after-tax operating profit (NOPAT) growth, a rising return on invested capital (ROIC), and positive comparable store sales.

The decline in fundamentals along with what appears to be a weakening competitive position versus Walmart (WMT) and Amazon (AMZN) lead us to close this position.

Figure 1: TGT vs. S&P 500 – Price Return

Sources: New Constructs, LLC and company filings

Note: Gain/Decline performance analysis excludes transaction costs and dividends.