Yahoo Finance Assessing Target (TGT) Stock Ahead of Q1 Earnings Release
Target Corporation TGT is expected to report a decline in its top line when it announces first-quarter fiscal 2024 results on May 22, before the opening bell. The Zacks Consensus Estimate for revenues stands at $24,504 million, suggesting a decline of approximately 3.2% from the prior-year figure.
Despite the anticipated revenue decline, Target's bottom line is expected to remain flat year over year. Over the past seven days, the Zacks Consensus Estimate for earnings per share for the quarter under review has increased by 3 cents to $2.05.
Notably, Target has a trailing four-quarter earnings surprise of 27.1%, on average. In the last reported quarter, this Minneapolis, MN-based company’s bottom line exceeded the Zacks Consensus Estimate by 21.1%.
Unlocking the Factors
Several factors contribute to the cautious outlook for Target's first-quarter performance. Consumers have been exhibiting increased caution due to a persistently high interest rate environment, the resumption of student loan repayments and decreased savings rates. These have reduced discretionary income, forcing individuals to make trade-offs in their family budgets and prioritize essential purchases over non-essential ones.
This shift in consumer behavior is likely to be reflected in Target’s overall sales numbers, with diminished spending on discretionary items. We anticipate a 3.6% decline in comparable sales in the first quarter of fiscal 2024, reflecting a 1.6% drop in the number of transactions and a 2% fall in the average transaction amount.
Nonetheless, Target has been proactive in adapting its business operations to remain competitive. The company's strategic initiatives, including digital advancements, store investments, partnerships with popular brands and targeted merchandise actions to capture market share, are anticipated to have contributed to its overall performance. The company might have seen strength in frequency businesses.
Target is likely to register margin expansion thanks to clean inventory as well as lower supply chain and freight costs. We anticipate gross margin and operating margin expansion of 140 and 10 basis points, respectively, for the to-be-reported quarter.
Target Corporation Price, Consensus and EPS Surprise
Target Corporation price-consensus-eps-surprise-chart | Target Corporation Quote
Valuation Picture
From a valuation perspective, Target shares present an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 16.51, below the five-year median of 17.06 and the Retail-Discount Stores industry’s average of 29.65, the stock offers compelling value for investors seeking exposure to the sector. Additionally, the stock currently has a Value Score of A, further validating its appeal.
Recent market movements show Target’s shares increasing 7.4% in the past three months compared with the industry’s rise of 4.9%. Trading at $160.65 as of May 16, shares of Target are likely to gain momentum, as our proven model predicts that the company is likely to beat earnings estimates in its upcoming release.
The Zacks Model
Our proven model predicts a likely 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 odds of an earnings beat, which is the case here.
Target has an Earnings ESP of +6.39% and carries a Zacks Rank #3. 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 also have the right combination of elements to post an earnings beat this season:
Lowe’s LOW currently has an Earnings ESP of +1.60% and carries a Zacks Rank #3. The Zacks Consensus Estimate for first-quarter fiscal 2024 earnings per share is pegged at $2.94, indicating a decline from $3.67 reported in the year-ago period. You can see the complete list of today’s Zacks #1 Rank stocks here.
Lowe’s top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $21.1 billion, which indicates a drop of 5.7% from the figure reported in the prior-year quarter. LOW has a trailing four-quarter earnings surprise of 3.2%, on average.
Macy’s M currently has an Earnings ESP of +48.57% and a Zacks Rank of 3. The company is likely to register a decrease in the bottom line when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for quarterly earnings per share of 18 cents suggests a sharp decline from the year-ago reported number of 56 cents.
Macy’s top line is also expected to decrease year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $4.82 billion, which suggests a decline of 3.2% from the prior-year quarter. Macy’s has a trailing four-quarter earnings surprise of 47.7%, on average.
American Eagle Outfitters AEO currently has an Earnings ESP of +6.84% and a Zacks Rank #3. The company is likely to register an increase in the bottom line when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for quarterly earnings per share of 27 cents suggests an increase of 58.8% from the year-ago quarter.
American Eagle Outfitters’ top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $1.15 billion, which implies an increase of 5.9% from the figure reported in the year-ago quarter. AEO has a trailing four-quarter earnings surprise of 22.7%, on average.
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Macy's, Inc. (M) : Free Stock Analysis Report
Target Corporation (TGT) : Free Stock Analysis Report
American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
Lowe's Companies, Inc. (LOW) : Free Stock Analysis Report
