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Target (TGT) Gains But Lags Market: What You Should Know

Zacks Equity Research
Semtech (SMTC) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Target (TGT) closed at $82.16 in the latest trading session, marking a +0.17% move from the prior day. The stock lagged the S&P 500's daily gain of 0.88%. Elsewhere, the Dow gained 0.55%, while the tech-heavy Nasdaq added 1.32%.

Coming into today, shares of the retailer had gained 4.44% in the past month. In that same time, the Retail-Wholesale sector gained 4.72%, while the S&P 500 gained 3.96%.

TGT will be looking to display strength as it nears its next earnings release. In that report, analysts expect TGT to post earnings of $1.43 per share. This would mark year-over-year growth of 8.33%. Our most recent consensus estimate is calling for quarterly revenue of $17.54 billion, up 4.52% from the year-ago period.

TGT's full-year Zacks Consensus Estimates are calling for earnings of $5.79 per share and revenue of $77.91 billion. These results would represent year-over-year changes of +7.42% and +3.4%, respectively.

Investors should also note any recent changes to analyst estimates for TGT. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. TGT is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, TGT is currently trading at a Forward P/E ratio of 14.16. For comparison, its industry has an average Forward P/E of 20.86, which means TGT is trading at a discount to the group.

We can also see that TGT currently has a PEG ratio of 2.25. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Retail - Discount Stores industry currently had an average PEG ratio of 2 as of yesterday's close.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 83, putting it in the top 33% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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