We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Target (TGT) Up 6.5% Since the Last Earnings Report?
Read MoreHide Full Article
It has been more than a month since the last earnings report for Target Corporation (TGT - Free Report) . Shares have added about 6.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Target Q2 Earnings & Sales Top Estimates, Lifts View
Target continued with its upbeat performance in fiscal 2017, as reflected from its impressive second-quarter results and an encouraging earnings outlook. The company’s strategic endeavors as well as improved traffic trends helped boost performance.
Let’s Unveil the Picture
The company posted second-quarter adjusted earnings of $1.23 per share that came ahead of the Zacks Consensus Estimate of $1.20 but remained flat year over year. We observed that higher sales and lower interest expense provide cushion to the bottom line. The company generated total sales of $16,429 million that also surpassed the Zacks Consensus Estimate of $16,282 million and jumped 1.6% from the year-ago quarter.
We believe that the initiatives such as the development of omni-channel capacities, diversification and localization of assortments along with emphasis on flexible format stores, bode well for this Minneapolis-based company. Target is investing in merchandise categories such as Style, Baby, Kids and Wellness and rolled out Target Restock program. It intends to launch new brands and be more competitive in terms of price. Further, in order to expand delivery capabilities the company has entered into a deal to acquire Grand Junction, the transportation tech company.
Comparable sales for the quarter increased 1.3%. The number of transactions rose 2.1%, while the average transaction amount declined 0.7%. Comparable digital channel sales surged 32% and added 1.1 percentage points to comparable sales.
Gross profit inched up 0.3% to $5,010 million, while gross margin contracted 40 basis points to 30.5%. Operating income fell 10.3% to $1,114 million, while operating margin shriveled 90 basis points to 6.8%.
Target’s credit card penetration expanded 50 basis points to 11.6%, whereas debit card penetration increased by 30 basis points to 13% during the quarter. Total REDcard penetration climbed to 24.6% from 23.9% in the year-ago quarter.
Other Financial Details
During the quarter, Target repurchased shares worth $296 million and paid dividends of $331 million. The company still had about $4.1 billion remaining under its $5 billion share buyback program. The company ended the quarter with cash and cash equivalents of $2,291 million, long-term debt and other borrowings of $10,892 million and shareholders’ investment of $11,098 million. Management plans to invest between $2–$2.5 billion of capital in fiscal 2017 and $3 billion or more next year.
A Glance at the Outlook
Management now anticipates that both the third and fourth quarter comparable sales growth will lie within the range Target had witnessed in the first and second quarters. The company expects fiscal 2017 comparable sales growth to be in a range around flat, plus or minus 1%.
Target now envisions third quarter earnings in the band of 75–95 cents and fiscal 2017 earnings between $4.34 and $4.54 up from $3.80 to $4.20 per share projected earlier.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the past month as none of them issued any earnings estimate revisions.
At this time, the stock has a great Growth Score of A, though it is lagging a bit on the momentum front with a C. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value and growth investors than momentum investors
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Target (TGT) Up 6.5% Since the Last Earnings Report?
It has been more than a month since the last earnings report for Target Corporation (TGT - Free Report) . Shares have added about 6.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Target Q2 Earnings & Sales Top Estimates, Lifts View
Target continued with its upbeat performance in fiscal 2017, as reflected from its impressive second-quarter results and an encouraging earnings outlook. The company’s strategic endeavors as well as improved traffic trends helped boost performance.
Let’s Unveil the Picture
The company posted second-quarter adjusted earnings of $1.23 per share that came ahead of the Zacks Consensus Estimate of $1.20 but remained flat year over year. We observed that higher sales and lower interest expense provide cushion to the bottom line. The company generated total sales of $16,429 million that also surpassed the Zacks Consensus Estimate of $16,282 million and jumped 1.6% from the year-ago quarter.
We believe that the initiatives such as the development of omni-channel capacities, diversification and localization of assortments along with emphasis on flexible format stores, bode well for this Minneapolis-based company. Target is investing in merchandise categories such as Style, Baby, Kids and Wellness and rolled out Target Restock program. It intends to launch new brands and be more competitive in terms of price. Further, in order to expand delivery capabilities the company has entered into a deal to acquire Grand Junction, the transportation tech company.
Comparable sales for the quarter increased 1.3%. The number of transactions rose 2.1%, while the average transaction amount declined 0.7%. Comparable digital channel sales surged 32% and added 1.1 percentage points to comparable sales.
Gross profit inched up 0.3% to $5,010 million, while gross margin contracted 40 basis points to 30.5%. Operating income fell 10.3% to $1,114 million, while operating margin shriveled 90 basis points to 6.8%.
Target’s credit card penetration expanded 50 basis points to 11.6%, whereas debit card penetration increased by 30 basis points to 13% during the quarter. Total REDcard penetration climbed to 24.6% from 23.9% in the year-ago quarter.
Other Financial Details
During the quarter, Target repurchased shares worth $296 million and paid dividends of $331 million. The company still had about $4.1 billion remaining under its $5 billion share buyback program. The company ended the quarter with cash and cash equivalents of $2,291 million, long-term debt and other borrowings of $10,892 million and shareholders’ investment of $11,098 million. Management plans to invest between $2–$2.5 billion of capital in fiscal 2017 and $3 billion or more next year.
A Glance at the Outlook
Management now anticipates that both the third and fourth quarter comparable sales growth will lie within the range Target had witnessed in the first and second quarters. The company expects fiscal 2017 comparable sales growth to be in a range around flat, plus or minus 1%.
Target now envisions third quarter earnings in the band of 75–95 cents and fiscal 2017 earnings between $4.34 and $4.54 up from $3.80 to $4.20 per share projected earlier.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the past month as none of them issued any earnings estimate revisions.
Target Corporation Price and Consensus
Target Corporation Price and Consensus | Target Corporation Quote
VGM Scores
At this time, the stock has a great Growth Score of A, though it is lagging a bit on the momentum front with a C. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value and growth investors than momentum investors
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.