Here’s what Target (TGT) looks like just ahead of Q3 results
Despite a difficult context, Target company TGT is expected to record an increase in revenue when it releases its third quarter fiscal 2020 results on November 18, ahead of the market opening. Zacks’ consensus estimate for revenue is set at $ 20,803 million, which indicates an 11.5% growth from the previous year’s figure.
In addition, the bottom line for this general merchandise retailer is expected to improve year over year. We note that Zacks’ consensus estimate for earnings for the quarter under review rose 2.6% to $ 1.57 in the past seven days. The figure suggests a 15.4% improvement over the previous year’s quarter.
Notably, the company has a surprise earnings for the last four quarters of 37.6% on average. In the last reported quarter, the Minneapolis, Minnesota-based company far exceeded Zacks’ consensus estimate.
Key factors to note
Target’s performance in the third quarter likely benefited from growing consumer demand for home office supplies, video games, decorative items, housewares and kitchenware as they work, learn, dine, and play at home due to the ongoing coronavirus pandemic. Notably, categories such as electronics, home, beauty, basic necessities, and food and beverage may have advanced in the reporting quarter.
The company’s focus on improving omnichannel capabilities, reshaping stores and expanding same-day delivery options is commendable. The company’s commitment to providing a unique shopping experience with safe and convenient options, including contactless delivery service and order pickup, and same day delivery with Shipt is worth mentioning. Customers have responded positively to these shopping tools.
Obviously, the aforementioned factors give rise to optimism about the outcome of the results. However, margins remain an area to watch. The impact of costs associated with digital execution, supply chain and expenses related to COVID-19 cannot be ruled out. We note that the costs associated with additional employee payments and benefits, and the investments made to safeguard the safety and health of customers and team members amid the coronavirus crisis may be reflected in the margins.
Target Company Price, Consensus and BPA Surprise
Target Corporation price-consensus-eps-surprise-chart | Quote from target company
What the Zacks model reveals
Our proven model predicts higher profits for Target this time around. The combination of a positive earnings ESP and a Zacks # 1 (strong buy), 2 (buy) or 3 (hold) ranking increases the odds of beating the winnings. You can discover the best stocks to buy or sell before they are flagged with our ESP Earnings Filter.
Target has a Zacks Rank # 2 and an ESP on earnings of + 8.77%.
3 additional actions with a favorable combination
Here are three other companies that you might want to consider, as our model shows that they too have the right combination of elements to show a profit beat:
General Dollar DG has a Revenue ESP of + 8.17% and a Zacks # 2 rank. You can see The full list of today’s Zacks # 1 Rank stocks here.
Lowe’s Companies LOW has + 8.85% Revenue ESP and Zacks # 3 rank.
Costco COST has +1.48% earning ESP and Zacks # 3 rank.
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