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Target (TGT) to Report Q1 Earnings: What Awaits the Stock?

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Target Corporation (TGT - Free Report) is likely to register an increase in the top line when it reports first-quarter fiscal 2021 results on May 19, before the market opens. The Zacks Consensus Estimate for revenues is pegged at $21,586 million, indicating growth of 10.1% from the prior-year reported figure.

Further, the bottom line of this general merchandise retailer is anticipated to improve year over year. We note that the Zacks Consensus Estimate for earnings for the quarter under review has risen by a couple of cents to $2.11 over the past seven days. The figure suggests a sharp improvement from 59 cents reported in the year-ago period.

Notably, the company has a trailing four-quarter earnings surprise of 53.3%, on average. In the last reported quarter, this Minneapolis, MN-based company surpassed the Zacks Consensus Estimate by 5.5%.

Key Factors to Note

Thanks to its one-stop shopping destination, customers have been opting Target for its multi-category assortment of owned and exclusive brands as well as popular national brands. The company, which is among the biggest winners amid the pandemic, has been deploying resources to enhance omni-channel capacities, including same-day delivery of in-store purchases and fast track technology improvements. Clearly, these are likely to have favorably impacted the company’s first-quarter performance.

The company’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. Markedly, it has been ramping up store openings and remodels, scaling up fulfillment services and enhancing supply chain capabilities.

Clearly, aforementioned factors instil optimism regarding the outcome of the results. However, margins still remain an area to watch. 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 have weighed on margins.

 

Target Corporation Price, Consensus and EPS Surprise

Target Corporation Price, Consensus and EPS Surprise

Target Corporation price-consensus-eps-surprise-chart | Target Corporation Quote

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Target this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) 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.

Target has a Zacks Rank #2 and an Earnings ESP of +20.84%.

3 More Stocks With Favorable Combination

Here are three other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

Dollar Tree (DLTR - Free Report) has an Earnings ESP of +1.40% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco (COST - Free Report) has an Earnings ESP of +3.12% and a Zacks Rank #3.

Ross Stores (ROST - Free Report) has an Earnings ESP of +6.25% and a Zacks Rank #3.

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