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Target (TGT) Lined Up for Q2 Earnings: What's in the Offing?

·5 min read

Target Corporation TGT is likely to register an increase in the top line when it reports second-quarter fiscal 2022 results on Aug 17 before market open. The Zacks Consensus Estimate for revenues is pegged at $26,159 million, indicating growth of 4% 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 slid by a penny to 71 cents over the past seven days. The figure suggests a sharp decline from earnings of $3.64 from the year-ago period.

We expect revenues to be up 4.2% year over year to $26,222.1 million and the bottom line to decline 79.3% to 75 cents a share.

Target has a trailing four-quarter negative earnings surprise of 1.3%, on average. In the last reported quarter, this Minneapolis, MN-based company’s bottom line missed the Zacks Consensus Estimate by 27%.

Key Factors to Note

Target has been deploying resources to enhance omnichannel capabilities, come up with new brands, refurbish stores and expand same-day delivery options to provide customers with 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 due to its multi-category assortment of owned and exclusive brands as well as popular national brands.

Cumulatively, the aforementioned factors are likely to have contributed to the company’s sales performance. We expect comparable sales to increase 3.7% during the quarter under discussion.

We believe that Target’s recent attempt to right size the inventory is in the right direction as the demand skewed toward consumer staples and away from discretionary categories. However, a slew of actions to tackle excess inventory, such as additional markdowns and cancellation of orders, is likely to have weighed on margins. Again, the impact of costs associated with digital fulfillment, supply chain and pandemic-related expenses cannot be ruled out.

Management projected the second-quarter operating margin rate at around 2%, down from its prior view, when it guided the metric to be roughly around its first-quarter operating margin rate of 5.3%.

However, management has been undertaking cost control measures, such as working with vendors to offset inflationary pressures and driving continued operating efficiencies. Also, Target remains focused on maintaining strength in frequency categories like Food & Beverage, Household Essentials and Beauty.

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. 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. However, that’s not the case here.

Target has an Earnings ESP of -7.91% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

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

Dollar General DG currently has an Earnings ESP of +0.99% and a Zacks Rank of 2. The company is likely to register an increase in the bottom line when it reports second-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly earnings has risen by a couple of cents over the past 30 days to $2.92 per share. The consensus mark for DG’s earnings per share suggests 8.6% growth from the year-ago quarter’s reported number. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General’s top line is expected to have risen year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $9.38 billion, which suggests a rise of 8.4% from the figure reported in the prior-year quarter. DG delivered an earnings beat of 2.8%, on average, in the trailing four quarters.

Ollie's Bargain OLLI currently has an Earnings ESP of +6.06% and a Zacks Rank #2. The company is expected to register a bottom-line decline when it reports second-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly earnings per share of 33 cents suggests a decline from the 52 cents reported in the year-ago quarter.

Ollie's Bargain’s top line is anticipated to have risen year over year. The consensus mark for OLLI’s revenues is pegged at $457.5 million, indicating an increase of 10% from the figure reported in the year-ago quarter.

The Children's Place PLCE currently has an Earnings ESP of +1.03% and a Zacks Rank #3. The company is likely to register a bottom-line decline when it reports second-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of 97 cents suggests a decline of 43.3% from the year-ago quarter.

The Children's Place's top line is expected to have declined year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $395.6 million, which indicates a decline of 4.4% from the figure reported in the prior-year quarter. PLCE has a trailing four-quarter earnings surprise of 58%, 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
 
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Ollie's Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report
 
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