Stocks Down Because Of Trump? Plus Target’s Earnings Trick
Stocks Down Because Of Trump? Plus Target’s Earnings Trick by Dave Kranzler – Investment Research Dynamics
The by-line on Fox Business this a.m. was that stocks were down because of “DC grid-lock.” Is this some kind of joke? How about stocks are down because they are more overvalued than at anytime in history by every single financial metric except the highly manipulated GAAP accounting net income calculations.
Speaking of which, the entire financial reporting apparatus has become one of the biggest jokes – if not an outright fraud – in financial markets history (with all due respect to the Ponzi scheme’s currently in operation at Amazon and Tesla). Target’s earnings report this morning is the perfect example.
Target’s stock “pop” was being attributed by the cable tv financial “reporters” to the fact Target’s sales and earnings per share “beat” Wall Street estimates. That’s not hard to do because the highly exalted “beat” is a rigged game played by company management and Wall Street, as management slowly “guides” Wall Street’s penguins into a series of reduced “estimates” leading up to the earnings release. By the time the results are reported, the earnings bar is low enough for a paraplegic to “jump” over.
The financial tv sock-puppets were reporting that Target’s sales had increased. Well, maybe vs. “guidance” but unfortunately none of these faux-reporters bothered to look at Target’s actual earnings report. There we find that Target’s sales declined year over year by 1.1%. Gross profit dropped 2.5%, which means Target likely engaged in predatory price-cutting to stimulate its online sales vs. Amazon.
Targets earnings before interest and taxes – its EBIT – plunged 10.2%. Provision for taxes increased quarter over quarter by $74 million, or 26%. So how did Target “beat” earnings?
Target’s “interest expense” using GAAP accounting manipulation declined by $271 million, or 65%. This is despite the fact that TGT’s debt level increased by $55 million year over year for Q1. What gives? Anyone who bothered to read TGT’s earnings release after seeing the headline report, likely nobody except me, would find this disclosure: