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Digital Sales Likely to Boost Target's (TGT) Q3 Earnings
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Target Corporation (TGT - Free Report) is slated to release third-quarter fiscal 2020 numbers on Nov 18, before the market opens. Amid an evolving and challenging retail landscape, this merchandise retailer has been focusing on store refurbishments, enhancing digital capabilities and expanding same-day fulfillment options, keeping in mind speed and convenience.
Digital Sales: A Key Driver
Consumers’ increased shift to online shopping due to the coronavirus pandemic seems to have worked in favor of Target. The company’s digital sales have been showcasing a sharp increase owing to increasing stay-at-home trends to maintain social distance amid the ongoing crisis. Clearly, the company’s third-quarter results are likely to reflect strength in digital business.
We note that in the last reported quarter, digital comparable sales soared 195% and added 13.4 percentage points to comparable sales.
Categories such as electronics, home, beauty, essentials and food & beverage might have gained in the quarter to be reported, on account of consumers’ increasing demand for home office items, video games, décor, domestics and kitchenware as they work, learn, dine and play at home.
Markedly, the company’s focus on enhancing omni-channel capacities, remodeling stores and expanding same-day delivery options is commendable. Target’s commitment to offer unique shopping experience with safe and convenient options including contactless Drive Up and Order Pickup, and same-day delivery with Shipt are worth mentioning. Customers have been responding positively to such shopping tools.
We believe that such robust initiatives to support online purchasing and ease deliveries might have aided Target in catering to the rising pandemic-induced demand. Obviously, the company has been ramping up investments in the wake of rising competition from the likes of Walmart (WMT - Free Report) , Dollar General (DG - Free Report) and Costco (COST - Free Report) .
Target Corporation Price, Consensus and EPS Surprise
Despite these upsides, we cannot overlook margins. Impact of costs associated with digital fulfilment, supply chain and COVID-19 related expenses cannot be ruled out. We note that costs related to additional employee payments and benefits, and investments undertaken to preserve safety and health of customers and team members amid the coronavirus crisis may get reflected in margins.
How Are Estimates Shaping Up?
The Zacks Consensus Estimate for Target’s third-quarter revenues is pegged at $20.8 billion, indicating an improvement of 11.5% from the prior-year quarter’s reported figure. The consensus mark for earnings has increased 3.3% over the past seven days to $1.58. The figure suggests growth of roughly 16.2% from the year-ago period.
The combination of a positive Earnings ESP and a Zacks Rank #1, 2 or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 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
Digital Sales Likely to Boost Target's (TGT) Q3 Earnings
Target Corporation (TGT - Free Report) is slated to release third-quarter fiscal 2020 numbers on Nov 18, before the market opens. Amid an evolving and challenging retail landscape, this merchandise retailer has been focusing on store refurbishments, enhancing digital capabilities and expanding same-day fulfillment options, keeping in mind speed and convenience.
Digital Sales: A Key Driver
Consumers’ increased shift to online shopping due to the coronavirus pandemic seems to have worked in favor of Target. The company’s digital sales have been showcasing a sharp increase owing to increasing stay-at-home trends to maintain social distance amid the ongoing crisis. Clearly, the company’s third-quarter results are likely to reflect strength in digital business.
We note that in the last reported quarter, digital comparable sales soared 195% and added 13.4 percentage points to comparable sales.
Categories such as electronics, home, beauty, essentials and food & beverage might have gained in the quarter to be reported, on account of consumers’ increasing demand for home office items, video games, décor, domestics and kitchenware as they work, learn, dine and play at home.
Markedly, the company’s focus on enhancing omni-channel capacities, remodeling stores and expanding same-day delivery options is commendable. Target’s commitment to offer unique shopping experience with safe and convenient options including contactless Drive Up and Order Pickup, and same-day delivery with Shipt are worth mentioning. Customers have been responding positively to such shopping tools.
We believe that such robust initiatives to support online purchasing and ease deliveries might have aided Target in catering to the rising pandemic-induced demand. Obviously, the company has been ramping up investments in the wake of rising competition from the likes of Walmart (WMT - Free Report) , Dollar General (DG - Free Report) and Costco (COST - Free Report) .
Target Corporation Price, Consensus and EPS Surprise
Target Corporation price-consensus-eps-surprise-chart | Target Corporation Quote
Other Trends
Despite these upsides, we cannot overlook margins. Impact of costs associated with digital fulfilment, supply chain and COVID-19 related expenses cannot be ruled out. We note that costs related to additional employee payments and benefits, and investments undertaken to preserve safety and health of customers and team members amid the coronavirus crisis may get reflected in margins.
How Are Estimates Shaping Up?
The Zacks Consensus Estimate for Target’s third-quarter revenues is pegged at $20.8 billion, indicating an improvement of 11.5% from the prior-year quarter’s reported figure. The consensus mark for earnings has increased 3.3% over the past seven days to $1.58. The figure suggests growth of roughly 16.2% from the year-ago period.
Target has an Earnings ESP of +7.75% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The combination of a positive Earnings ESP and a Zacks Rank #1, 2 or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 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 >>