Post Earnings Coverage as Target Earnings Soared 22%; Earnings and Same Store Sales Guidance Raised
Upcoming AWS Coverage on Big Lots Post-Earnings Results
LONDON, UK / ACCESSWIRE / November 28, 2016 / Active Wall St. announces its post-earnings coverage on Target Corp. (NYSE: TGT). The company posted its financial results for the third quarter fiscal 2016 on November 16, 2016. The retailer's earnings, revenue, and same store results surpassed market expectations. Target also raised its Q4 2016 and FY16 outlook. Register with us now for your free membership at: http://www.activewallst.com/register/.
One of Target's competitors within the Discount, Variety Stores space, Big Lots Inc. (NYSE: BIG), will report third-quarter earnings on December 2, 2016. AWS will be initiating a research report on Big Lots in the coming days.
Today, AWS is promoting its earnings coverage on TGT touching on BIG. Get our free coverage by signing up to:
http://www.activewallst.com/registration-3/?symbol=TGT
http://www.activewallst.com/registration-3/?symbol=BIG
Earnings Reviewed
During the quarter ended on October 29th, 2016, Target's net income totaled $608 million, or $1.06 per share, up 39.7% from $549 million, or $0.87 per share, for the same period last year. The company's adjusted earnings per share were $1.04, beating analysts' forecasts of $0.83 per share. Target's Q3 2016 revenue came in at $16.4 billion compared to revenue of $17.6 billion in Q3 2015; thus surpassing market expectations of $16.3 billion in revenue.
Segment Results
Target's Q3 2016 revenue declined 6.7% on a y-o-y basis, reflecting a 0.2% decline in comparable sales combined with the removal of pharmacy and clinic sales from this year's results. The company's comparable digital channel sales surged 26% and contributed 0.7% to comparable sales growth. The company noted that Digital growth was fastest in its Signature categories and was particularly strong in kids, driven by the strength of its back-to-school offering and the launch of Cat & Jack.
The company's earnings before interest expense and income taxes (EBIT), which is Target's measure of segment profit, were $1.06 billion in Q3 2016, an increase of 9.9% from $962 million in Q3 2015. Target's Q3 2016 EBITDA and EBIT margin rates were 9.9% and 6.4%, respectively, compared to 8.6% and 5.5%, respectively, in the prior year's same period. For Q3 2016, the company's gross margin rate was 30.2% compared to 29.4% in Q3 2015, reflecting the benefit of the sale of its pharmacy and clinic businesses and strong Signature Category sales growth.
Balance Sheet
During Q3 2016, Target returned $1.2 billion to shareholders, including, dividends of $345 million compared to $352 million in Q3 2015. For the reported quarter, share repurchase totaled $878 million, including, open market transactions that retired 8.1 million shares of common stock at an average price of $69.73, for a total investment of $564 million. An accelerated share repurchase (ASR) agreement that retired 4.6 million shares of common stock at an average price of $67.67, for a total investment of $314 million. In September 2016, Target's Board of Directors authorized a new $5 billion share repurchase program. At the end of Q3 2016, including the $314 million investment in the ASR, $300 million of capacity remained under the prior program.
For the trailing twelve months through Q3 2016, Target's after-tax return on invested capital (ROIC) was 16.3% compared to 13.0% for the twelve months through Q3 2015. During Q3 2016, Target obtained a new $2.5 billion credit facility that expires in October of 2021. This new facility replaces a two and a quarter billion dollar facility that was scheduled to expire in 2018. As on October 29th, 2016, Target had cash and cash equivalents worth $1.23 billion compared to cash and cash equivalents worth $1.98 billion as on October 31st, 2015.
Guidance
Target raised its expectations for Q4 2016 comparable sales and now expects growth in the range of (1.0) % to 1.0% compared to prior guidance of (2.0) % to flat. In Q4 2016, Target expects both GAAP Earnings from continuing operations and adjusted earnings of $1.55 to $1.75 per share. For FY16, Target now expects GAAP earnings from continuing operations of $4.67 to $4.87 compared to its prior guidance of $4.36 to 4.76. The Company expects FY16 adjusted earnings of $5.10 to $5.30 per share compared to the prior guidance of $4.80 to $5.20 share.
Stock Performance
On Friday, the stock closed the trading session at $78.61, slightly up 0.17% from its previous closing price of $78.48. A total volume of 2.54 million shares have exchanged hands. Target's stock price advanced 15.58% in the last month, 12.69% in the past three months, and 15.98% in the previous six months. The stock is trading at a PE ratio of 14.43 and has a dividend yield of 3.05%.
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