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Here's How Target (TGT) Looks Just Ahead of Q1 Earnings

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·4 min read
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Target Corporation TGT is likely to register a marginal increase in the top line when it reports first-quarter fiscal 2022 results on May 18, before market open. The Zacks Consensus Estimate for revenues is pegged at $24,460 million, indicating growth of 1.1% from the prior-year reported figure.

The bottom line of this general merchandise retailer is anticipated to decline year over year. Although the Zacks Consensus Estimate for earnings per share for the quarter under review has increased 1.4% to $3.00 over the past seven days, the figure still suggests a decline of 18.7% from the year-ago period.

Target has a trailing four-quarter earnings surprise of 21.3%, on average. In the last reported quarter, this Minneapolis, MN-based company surpassed the Zacks Consensus Estimate by 11.5%.

Key Factors to Note

Target has been deploying resources to enhance omni-channel capabilities, come up with new brands, refurbish stores and expand same-day delivery options to provide customers a seamless shopping experience. Markedly, it has been ramping up store openings and remodels, scaling up fulfillment services and enhancing supply chain capabilities. Customers have been opting for Target owing to its multi-category assortment of owned and exclusive brands as well as popular national brands.

However, Target is likely to have witnessed a modest acceleration in sales as soaring inflation has been pinching consumers’ pockets. Again, the company is up against last year’s record government stimulus that spurred demand above pre-pandemic levels. Also, digital comparable sales might have been soft compared with the year-ago period.

Meanwhile, demand is likely to have been skewed more toward essentials, which carry lower margins. Again, the impact of costs associated with digital fulfillment, supply chain and COVID-related expenses cannot be ruled out. We note that higher merchandise and freight costs hurt the gross margin in the last-reported quarter.

Target Corporation Price, Consensus and EPS Surprise

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 does not conclusively predict 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 odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Target has an Earnings ESP of -0.93% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With the Favorable Combination

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

Costco COST currently has an Earnings ESP of +1.90% and a Zacks Rank #2. The company is likely to register bottom-line improvement when it reports third-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $3.04 suggests an increase of 10.6% from the year-ago quarter’s reported figure.

Costco's top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $51.76 billion, which indicates an improvement of 14.3% from the figure reported in the prior-year quarter. COST has a trailing four-quarter earnings surprise of 13.3%, on average.

Ross Stores ROST currently has an Earnings ESP of +1.24% and a Zacks Rank #2. The company is likely to register bottom-line decline when it reports first-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of 99 cents suggests a decline from $1.34 reported in 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 $4.54 billion, which indicates a marginal improvement of 0.5% from the figure reported in the prior-year quarter. ROST has a trailing four-quarter earnings surprise of 33.3%, on average.

Casey's General Stores CASY currently has an Earnings ESP of +3.73% and a Zacks Rank #3. The company is likely to register an increase in the bottom line when it reports fourth-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $1.48 suggests an increase of 32.1% from the year-ago reported number.

Casey's top line is expected to increase year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $3.34 billion, which suggests an increase of 40.4% from the prior-year quarter. CASY has a trailing four-quarter earnings surprise of 21.6%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Target Corporation (TGT) : Free Stock Analysis Report

Costco Wholesale Corporation (COST) : Free Stock Analysis Report

Ross Stores, Inc. (ROST) : Free Stock Analysis Report

Casey's General Stores, Inc. (CASY) : Free Stock Analysis Report

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