Target Corporation (NYSE:TGT) shares are down marginally after the retailer announced disappointing third quarter earnings but managed to mask it with a giant share buyback. Shareholders are hoping that the company will be able to turn itself around in a tough sales environment, while many are encouraged by the giant share buyback announced.

"Our third quarter earnings were disappointing due to soft sales in our higher margin categories, leading to lower-than-expected gross margin in our core retail operations," said Chairman and CEO Bob Ulrich. "However, we have not observed any meaningful change in the intensity of the competitive environment and continue to believe that we are well-positioned to operate in a variety of sales environments going forward."

Target also announced a giant $10 billion share buyback program along with an update to credit card receivables unit that is still pending. In September, the company said it was considering selling $7 billion in credit card assets in order to unlock further value for shareholders. The buyback alone would result in nearly a quarter of its shares being repurchased while the $7 billion cash infusion from a sale would also be a windfall.

In the end, Sears is facing a variety of problems. The company is facing a credit downgrade and a tough competitive environment. However, a share buyback combined with the prospects of a $7 billion sale of its credit card division. Combined, these factors make TGT a stock worth watching!

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