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The Zacks Analyst Blog Highlights: Target, Dollar Tree, Costco and Dollar General

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For Immediate Release

Chicago, IL – March 1, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Target Corporation TGT, Dollar Tree, Inc. DLTR, Costco Wholesale Corporation COST and Dollar General Corporation DG.

Here are highlights from Friday’s Analyst Blog:

Target (TGT) Queues Up for Q4 Earnings: What's in Store?

Target is likely to register an increase in the top line when it reports fourth-quarter fiscal 2020 results on Mar 2, before the market opens. The Zacks Consensus Estimate for revenues is pegged at $27,513 million, indicating growth of 17.6% from the prior-year reported figure.

Further, the bottom line of this general merchandise retailer is anticipated to improve year over year. We note that the Zacks Consensus Estimate for earnings for the quarter under review has risen by 2% to $2.52 over the past seven days. The figure suggests a sharp improvement from $1.69 reported in the year-ago period.

Notably, the company has a trailing four-quarter earnings surprise of 52.4%, on average. In the last reported quarter, this Minneapolis, MN-based company's bottom line surpassed the Zacks Consensus Estimate by a significant margin.

Key Factors to Note

Target’s fourth-quarter performance is likely to have benefited from consumers’ increasing demand for home office items, décor, domestics and kitchenware as they work, learn and dine at home due to the ongoing coronavirus pandemic. Markedly, the company’s focus on enhancing omni-channel capacities, remodeling stores and expanding same-day delivery options is commendable.

Target’s commitment to offer a unique shopping experience with safe and convenient options including contactless Drive Up and Order Pickup, and same-day delivery with Shipt are worth mentioning. Customers have been responding positively to such shopping tools.

Target had informed that comparable sales in the combined November/December period increased 17.2%, backed by a 12.3% jump in average ticket as consumers consolidated trips. Comparable traffic grew 4.3%. While store-originated comparable sales rose 4.2%, comparable digital sales soared 102% driven primarily by the company's same-day fulfillment services.

We note that Home registered comparable-sales growth in the low-20% range during the November/December period. Comparable sales in Hardlines also surged in the low 20% range, reflecting mid-20% gain in Electronics. In Food & Beverage, comparable sales growth was in line with the company average, while Beauty & Essentials registered an increase in the low teens. Apparel posted comparable sales growth in the high-single digit range.

Clearly, aforementioned factors raise optimism about the outcome of the results. However, margins still remain an area to watch. Impact of costs associated with digital fulfilment, supply chain and COVID-19 related expenses cannot be ruled out. We note that costs related to additional employee payments and benefits, and investments undertaken to preserve safety and health of customers and team members amid the coronavirus crisis may have weighed on margins.

What the Zacks Model Unveils

Our proven model predicts 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 chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Target has a Zacks Rank #2 and an Earnings ESP of +2.48%.

3 More Stocks With Favorable Combination

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

Dollar Tree has an Earnings ESP of +1.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco as an Earnings ESP of +2.43% and a Zacks Rank #3.

Dollar General has an Earnings ESP of +0.32% and a Zacks Rank #3.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that have beaten the market more than 2X over with a stunning average gain of +24.9% per year.

These 7 were selected because of their superior potential for immediate breakout.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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Target Corporation (TGT) : Free Stock Analysis Report
 
Dollar Tree, Inc. (DLTR) : Free Stock Analysis Report
 
Dollar General Corporation (DG) : Free Stock Analysis Report
 
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
 
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