Target Flashes Buy Signal On Blowout Earnings

Big-box retailer Target (TGT) delivered blowout first-quarter estimates Wednesday, after rival Walmart (WMT) beat views with blowout same-store sales. Target stock jumped, signaling a bullish rebound.


Target Earnings

Estimates:  Zacks Investment Research analysts expect EPS of $2.20, a whopping 273% increase from the year-ago quarter. They see sales rising 12% to $21.86 billion. Same-store sales are seen increasing 11.2%, according to Consensus Metrix.

Results: Earnings skyrocketed 525% to $3.69 a share as sales rose 23% to $24.20 billion. Same-store sales leapt 22.9%. In-store comps leapt 18%, while digital sales jumped 50% after a 141% spike a year earlier as the pandemic first hit.

Revenue and earnings were buoyed by January and March stimulus check disbursements. Digital sales continue to be strong, although growth is slowing. The pandemic boosted online comps as much as 195% year-over-year in the second quarter of 2020. Growth rates have moderated somewhat since then. Target reported a 118% jump in digital sales in the last quarter of 2020.

Outlook: The discount giant sees fiscal Q2 comps rising in the mid- to high-single digit range, with positive comps in the last two quarters of the year. Analysts see Target earnings per share falling 27% to $2.47 in Q2 and sales declining 5.5% to $21.72 billion, as the company faces tough comparisons.

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Target Stock

Shares rose 4.2% to 215.02 in premarket trading on the stock market today. Target stock is signaling a bullish rebound from the 10-week moving average, which creates an entry around 202.23.

Target stock broke out past a 196.35 buy point from a double-bottom base on March 26, according to MarketSmith chart analysis. Shares popped past a 210.96 follow-up buy point from a three-weeks-tight pattern, but the breakout failed when shares quickly reversed.

The relative strength line has been going sideways for a while. Its RS Rating is 74 out of a possible 99, while its EPS Rating is 90.

Walmart stock lot a fraction early Wednesday after rising 1.7% in the prior session. On Tuesday, the Dow Jones retail giant reported better-than-expected Q1 earnings and revenue. U.S. same-store sales grew 6%, with Sam’s Club comps up 7.2%. That smashed estimates for U.S. comps to rise 0.9% with Sam’s Club up 0.7%.

U.S. online sales growth slowed to 37%.

Follow Adelia Cellini Linecker on twitter @IBD_Adelia.


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