Target Q3 Earnings: Can TGT Hit Its $1.19 EPS Target?

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Target Corporation (NYSE:TGT) is scheduled to report Q3 earnings results on November 20, 2019, at 7:00 a.m. central time. The company is expected to report earnings of $1.19/share on revenue of $18.441 billion.

The consensus earnings per share (EPS) of $1.19/share is based on a poll of 24 analysts and represents a growth of 9.6% over the same quarter last year when the company reported earnings of $1.09/share. The revenue forecast of $18.441 billion based on a poll of 17 analysts implies a year-over-year (YoY) growth of 3.5%. Last year the company reported $17.821 billion in revenue for the quarter.

Expected to report EPS growth of $0.10/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $18,440.70 $17,821.00 3.5%
EPS $1.19 $1.09 9.6%

According to Target’s investor relations portal, analysts have the following distribution of ratings for the company’s share price:

image (4)

While it’s generally been a challenging environment for brick and mortar retailers, Target has managed to grow top-line while regularly maintaining gross margins around 29%:

Target Revenue Gross Margin

The stock price has also performed well over the last three months, up around 28% since the previous earnings report:

TGT Stock Price.png

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and missed expectations 3 quarters. What are your expectations from Target for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.62 $1.82 12.5% Beat
Q1, 2020 $1.43 $1.53 7.0% Beat
Q4, 2019 $1.53 $1.53 0.3% Beat
Q3, 2019 $1.10 $1.09 -1.4% Missed
Q2, 2019 $1.41 $1.47 4.3% Beat
Q1, 2019 $1.39 $1.32 -5.3% Missed
Q4, 2018 $1.38 $1.37 -0.7% Missed
Q3, 2018 $0.85 $0.91 7.1% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending August 3, 2019, the stock price reacted by increasing by 24.3%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-21 $85.53 $106.32 24.3% Increase
2019-05-22 $71.96 $79.40 10.3% Increase
2019-03-05 $72.67 $76.90 5.8% Increase
2018-11-20 $77.79 $69.26 -11.0% Decline

Fundamentals And Technical Analysis

Target is currently trading at $110.61/share, down -0.6% for the day. The company is trading at approximately 96.3% of its 52-week high of $114.83/share. The company’s stock price is up 29.3% since the last earnings report and up 3.9% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 59.86 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 18.1x and a forward P/E multiple of 17.9x. Target’s current share price also implies a price-to-book (P/B) multiple of 4.8x. The following table summarizes some other key fundamental ratios:

Data as of November 19, 2019
Metric Value
Last Fiscal Period FY2020.Q2
Period End Date August 3, 2019
Stock Price (Current) $110.61
P/E Ratio 18.1x
P/E Ratio (Fwd) 17.9x
PEG Ratio 4.1
Total Debt to Capital (%) 19.6%
Levered Free Cash Flow $3.007 billion
Enterprise Value / EBITDA 9.9x

Company Profile: Target Corporation

Target Corporation is a large-cap stock with a market capitalization of $57.204 billion and a total enterprise value of $69.351 billion. The company operates in the Consumer Discretionary sector and the Multiline Retail industry.

Target Corporation operates as a general merchandise retailer in the United States. The company offers beauty and household essentials; food assortments, including perishables, dry grocery, dairy, and frozen items; and apparel, accessories, home décor products, electronics, toys, seasonal offerings, and other merchandise. The company also provides in-store amenities, such as Target Café, Target Optical, Starbucks, and other food service offerings. It sells its products through its stores; and digital channels, including Target.com.

As of September 19, 2019, the company operated approximately 1,800 stores. Target Corporation was founded in 1902 and is headquartered in Minneapolis, Minnesota.

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