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Target (TGT) Lined Up for Q4 Earnings: Factors to Consider
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Target Corporation (TGT - Free Report) is likely to register a decline in the top line when it reports fourth-quarter fiscal 2022 results on Feb 28 before market open. The Zacks Consensus Estimate for revenues is pegged at $30.69 billion, indicating a decline of 1% from the prior-year reported figure.
The bottom line of this general merchandise retailer is anticipated to have declined year over year. The Zacks Consensus Estimate for earnings per share for the quarter under review has declined by a penny to $1.38 over the past seven days and suggests a sharp decline from the earnings of $3.19 reported in the year-ago period.
We expect revenues to be down 1.9% year over year to $30,406.8 million and the bottom line to decline 57.6% to $1.35 per share.
Target has a trailing four-quarter negative earnings surprise of 22.2%, on average. In the last reported quarter, this Minneapolis, MN-based company’s bottom line missed the Zacks Consensus Estimate by 28.4%.
Key Things to Note
On its last earnings call, Target informed that softening sales and profit trends that emerged in the latter part of the third quarter continued in November. Undoubtedly, soaring prices have squeezed consumers’ disposable income, compelling them to rein in discretionary spending. Target might have witnessed the soft demand for discretionary products, partly offset by sustained strength in essentials.
Management earlier forecast a low-single-digit decline in comparable sales for the fourth quarter. We expect comparable sales to decline 2.1% in the quarter under discussion.
Target Corporation Price, Consensus and EPS Surprise
We believe that higher markdowns to clear excess inventory, increased merchandise and freight costs, and an unfavorable product mix might have weighed on margins. Additionally, the increased compensation and headcount in distribution centers might have hurt the gross margin rate. Management anticipated greater markdown pressure in the final quarter due to promotions, as customers become more price sensitive.
Target projected the fourth-quarter operating margin rate to be centered around 3%. This indicates a sharp contraction of 380 basis points from the year-ago period.
Nonetheless, management has been undertaking cost-control measures, such as working with vendors to offset inflationary pressures and driving continued operating efficiencies. The company’s digital endeavors, store investments and merchandise actions to gain market share bode well.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Target this time. 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, which is the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
Target has a Zacks Rank #3 and an Earnings ESP of +5.88%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks With the 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:
Ross Stores (ROST - Free Report) currently has an Earnings ESP of +3.16% and a Zacks Rank #2. The company is likely to register an increase in the bottom line when it reports fourth-quarter fiscal 2022 results. The Zacks Consensus Estimate for the quarterly earnings per share of $1.23 suggests an increase of 18.3% from the year-ago quarter.
Ross Stores’ top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $5.13 billion, which suggests a rise of 2.2% from the figure reported in the prior-year quarter. ROST delivered an earnings beat of 10.5%, on average, in the trailing four quarters.
Casey's General Stores (CASY - Free Report) currently has an Earnings ESP of +14.04% and a Zacks Rank #3. The company is likely to register a bottom-line decline when it reports third-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for the quarterly earnings per share of $1.67 suggests a decline of 2.3% from the year-ago quarter.
Casey's top line is expected to increase year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $3.52 billion, which indicates an increase of 15.5% from the figure reported in the prior-year quarter. Casey's has a trailing four-quarter earnings surprise of 7.2%, on average.
Five Below (FIVE - Free Report) currently has an Earnings ESP of +0.30% and a Zacks Rank of 3. The company is likely to register an increase in the bottom line when it reports fourth-quarter fiscal 2022 results. The Zacks Consensus Estimate for the quarterly earnings per share of $3.06 suggests an increase of 22.9% from the year-ago quarter.
Five Below’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.11 billion, which suggests a rise of 10.9% from the figure reported in the prior-year quarter.
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Target (TGT) Lined Up for Q4 Earnings: Factors to Consider
Target Corporation (TGT - Free Report) is likely to register a decline in the top line when it reports fourth-quarter fiscal 2022 results on Feb 28 before market open. The Zacks Consensus Estimate for revenues is pegged at $30.69 billion, indicating a decline of 1% from the prior-year reported figure.
The bottom line of this general merchandise retailer is anticipated to have declined year over year. The Zacks Consensus Estimate for earnings per share for the quarter under review has declined by a penny to $1.38 over the past seven days and suggests a sharp decline from the earnings of $3.19 reported in the year-ago period.
We expect revenues to be down 1.9% year over year to $30,406.8 million and the bottom line to decline 57.6% to $1.35 per share.
Target has a trailing four-quarter negative earnings surprise of 22.2%, on average. In the last reported quarter, this Minneapolis, MN-based company’s bottom line missed the Zacks Consensus Estimate by 28.4%.
Key Things to Note
On its last earnings call, Target informed that softening sales and profit trends that emerged in the latter part of the third quarter continued in November. Undoubtedly, soaring prices have squeezed consumers’ disposable income, compelling them to rein in discretionary spending. Target might have witnessed the soft demand for discretionary products, partly offset by sustained strength in essentials.
Management earlier forecast a low-single-digit decline in comparable sales for the fourth quarter. We expect comparable sales to decline 2.1% in the quarter under discussion.
Target Corporation Price, Consensus and EPS Surprise
Target Corporation price-consensus-eps-surprise-chart | Target Corporation Quote
We believe that higher markdowns to clear excess inventory, increased merchandise and freight costs, and an unfavorable product mix might have weighed on margins. Additionally, the increased compensation and headcount in distribution centers might have hurt the gross margin rate. Management anticipated greater markdown pressure in the final quarter due to promotions, as customers become more price sensitive.
Target projected the fourth-quarter operating margin rate to be centered around 3%. This indicates a sharp contraction of 380 basis points from the year-ago period.
Nonetheless, management has been undertaking cost-control measures, such as working with vendors to offset inflationary pressures and driving continued operating efficiencies. The company’s digital endeavors, store investments and merchandise actions to gain market share bode well.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Target this time. 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, which is the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
Target has a Zacks Rank #3 and an Earnings ESP of +5.88%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks With the 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:
Ross Stores (ROST - Free Report) currently has an Earnings ESP of +3.16% and a Zacks Rank #2. The company is likely to register an increase in the bottom line when it reports fourth-quarter fiscal 2022 results. The Zacks Consensus Estimate for the quarterly earnings per share of $1.23 suggests an increase of 18.3% from the year-ago quarter.
Ross Stores’ top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $5.13 billion, which suggests a rise of 2.2% from the figure reported in the prior-year quarter. ROST delivered an earnings beat of 10.5%, on average, in the trailing four quarters.
Casey's General Stores (CASY - Free Report) currently has an Earnings ESP of +14.04% and a Zacks Rank #3. The company is likely to register a bottom-line decline when it reports third-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for the quarterly earnings per share of $1.67 suggests a decline of 2.3% from the year-ago quarter.
Casey's top line is expected to increase year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $3.52 billion, which indicates an increase of 15.5% from the figure reported in the prior-year quarter. Casey's has a trailing four-quarter earnings surprise of 7.2%, on average.
Five Below (FIVE - Free Report) currently has an Earnings ESP of +0.30% and a Zacks Rank of 3. The company is likely to register an increase in the bottom line when it reports fourth-quarter fiscal 2022 results. The Zacks Consensus Estimate for the quarterly earnings per share of $3.06 suggests an increase of 22.9% from the year-ago quarter.
Five Below’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.11 billion, which suggests a rise of 10.9% from the figure reported in the prior-year quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.