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.
Target Corporation (TGT - Free Report) posted second straight quarter of negative earnings surprise, when it reported first-quarter fiscal 2018 results. The company posted adjusted earnings of $1.32 per share that not only missed the Zacks Consensus Estimate of $1.38 but also came below the mid-point of the earlier provided guidance range of $1.25-$1.45 per share. Clearly, this was not well perceived by investors.
We note shares of this Minneapolis-based company are down roughly 6% during pre-market trading hours. Even investors ignored the fact that the bottom line improved 9.4% from the prior-year period. This year-over-year growth can be attributable to increased sales and fall in interest expense as well as share repurchase activity that to an extent offset rise in cost of sales and higher SG&A expenses.
The company generated total revenue of $16,781 million that came ahead the Zacks Consensus Estimate of $16,529 million for the fifth straight quarter and increased 3.4% from the year-ago quarter. Sales rose 3.5% to $16,556 million, while other revenue declined 1.2% to $225 million.
Target is trying all means to rapidly adapt to the changes in the retail ecosystem. The company is deploying resources to enhance omni-channel capacities, come up with new brands, remodel or refurbish stores, and expand same-day delivery options to expedite the shopping process.
During the quarter under review, Target concluded 56 remodels, opened 7 new outlets and launched three new brands. The company also introduced Drive-Up service in more than 250 stores and expanded Target Restock nationwide. Courtesy to Shipt, the company also rolled out same-day delivery from more than 700 outlets.
Notably, comparable sales for the quarter increased 3% compared with 1.3% decline witnessed in the year-ago period. The number of transactions jumped 3.7%, while the average transaction amount decreased 0.6%. Comparable digital channel sales surged 28% and added 1.1 percentage points to comparable sales.
These helped this Zacks Rank #3 (Hold) stock to gain 35% in the past six months compared with the industry’s growth of 17%.
Gross margin contracted 20 basis points to 29.8%, while operating margin shriveled 90 basis points to 6.2%. Industry experts believe that incremental investments and rise in costs due to new fulfillment options might have hurt margins.
Target’s debit card penetration contracted 10 basis points to 13.5%, while credit card penetration fell 50 basis points to 10.6%. Total REDcard penetration declined to 24.1% from 24.7% in the year-ago quarter.
Target Corporation Price, Consensus and EPS Surprise
During the quarter, Target repurchased shares worth $494 million and paid dividends of $334 million. The company still had about $2.8 billion remaining under its $5 billion share buyback program. The company ended the quarter with cash and cash equivalents of $1,060 million, long-term debt and other borrowings of $11,107 million and shareholders’ investment of $11,158 million.
A Glance at the Outlook
Management now anticipates second quarter comparable sales to be up in the low to mid single-digit range, while for fiscal 2018 the metric is expected to increase in the low-single digit. Target now envisions second quarter earnings in the band of $1.30-$1.50 and fiscal 2018 earnings between $5.15 and $5.45 per share. The current Zacks Consensus Estimate for the second quarter and fiscal 2018 stands at $1.34 and $5.29, respectively.
Interested in Retail Space? Check These 3 Trending Stocks
Fossil Group (FOSL - Free Report) delivered an average positive earnings surprise of 54.1% in the trailing four quarters and carries a Zacks Rank #2.
DSW Inc. delivered an average positive earnings surprise of 13.4% in the trailing four quarters. It has a long-term earnings growth rate of 7.3% and carries a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Target (TGT) Q1 Earnings Miss, Revenues Beat Estimates
Target Corporation (TGT - Free Report) posted second straight quarter of negative earnings surprise, when it reported first-quarter fiscal 2018 results. The company posted adjusted earnings of $1.32 per share that not only missed the Zacks Consensus Estimate of $1.38 but also came below the mid-point of the earlier provided guidance range of $1.25-$1.45 per share. Clearly, this was not well perceived by investors.
We note shares of this Minneapolis-based company are down roughly 6% during pre-market trading hours. Even investors ignored the fact that the bottom line improved 9.4% from the prior-year period. This year-over-year growth can be attributable to increased sales and fall in interest expense as well as share repurchase activity that to an extent offset rise in cost of sales and higher SG&A expenses.
The company generated total revenue of $16,781 million that came ahead the Zacks Consensus Estimate of $16,529 million for the fifth straight quarter and increased 3.4% from the year-ago quarter. Sales rose 3.5% to $16,556 million, while other revenue declined 1.2% to $225 million.
Target is trying all means to rapidly adapt to the changes in the retail ecosystem. The company is deploying resources to enhance omni-channel capacities, come up with new brands, remodel or refurbish stores, and expand same-day delivery options to expedite the shopping process.
During the quarter under review, Target concluded 56 remodels, opened 7 new outlets and launched three new brands. The company also introduced Drive-Up service in more than 250 stores and expanded Target Restock nationwide. Courtesy to Shipt, the company also rolled out same-day delivery from more than 700 outlets.
Notably, comparable sales for the quarter increased 3% compared with 1.3% decline witnessed in the year-ago period. The number of transactions jumped 3.7%, while the average transaction amount decreased 0.6%. Comparable digital channel sales surged 28% and added 1.1 percentage points to comparable sales.
These helped this Zacks Rank #3 (Hold) stock to gain 35% in the past six months compared with the industry’s growth of 17%.
Gross margin contracted 20 basis points to 29.8%, while operating margin shriveled 90 basis points to 6.2%. Industry experts believe that incremental investments and rise in costs due to new fulfillment options might have hurt margins.
Target’s debit card penetration contracted 10 basis points to 13.5%, while credit card penetration fell 50 basis points to 10.6%. Total REDcard penetration declined to 24.1% from 24.7% in the year-ago quarter.
Target Corporation Price, Consensus and EPS Surprise
Target Corporation Price, Consensus and EPS Surprise | Target Corporation Quote
Other Financial Details
During the quarter, Target repurchased shares worth $494 million and paid dividends of $334 million. The company still had about $2.8 billion remaining under its $5 billion share buyback program. The company ended the quarter with cash and cash equivalents of $1,060 million, long-term debt and other borrowings of $11,107 million and shareholders’ investment of $11,158 million.
A Glance at the Outlook
Management now anticipates second quarter comparable sales to be up in the low to mid single-digit range, while for fiscal 2018 the metric is expected to increase in the low-single digit. Target now envisions second quarter earnings in the band of $1.30-$1.50 and fiscal 2018 earnings between $5.15 and $5.45 per share. The current Zacks Consensus Estimate for the second quarter and fiscal 2018 stands at $1.34 and $5.29, respectively.
Interested in Retail Space? Check These 3 Trending Stocks
Best Buy (BBY - Free Report) delivered an average positive earnings surprise of 19.1% in the trailing four quarters. It has a long-term earnings growth rate of 14.6% and carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fossil Group (FOSL - Free Report) delivered an average positive earnings surprise of 54.1% in the trailing four quarters and carries a Zacks Rank #2.
DSW Inc. delivered an average positive earnings surprise of 13.4% in the trailing four quarters. It has a long-term earnings growth rate of 7.3% and carries a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>