Target stock rises as Q2 results top expectations, guidance suggested by Investing.com
The target (TGT) saw its shares rise 15% on Wednesday after the retailer reported better-than-expected second-quarter earnings and revenue while raising its full-year profit outlook.
The Minneapolis-based company posted adjusted earnings per share of $2.57, beating analysts' estimates of $2.19. Revenue for the quarter came in at $25.45 billion, beating the consensus forecast of $25.2 billion and representing a YoY increase of 2.6%.
Comparable sales grew 2% in the second quarter, driven by a 3% increase in traffic. Comparable digital sales rose 8.7%, with same-day services experiencing double-digit growth.
Target operating income margin improved to 6.4%, up 160 basis points from last year, primarily due to higher gross margin.
“We committed to a return to growth in the second quarter, and the team delivered, all while expanding operating margins and growing EPS more than 40% compared to last year,” said Brian Cornell, chairman and CEO of Target Corporation. NYSE:).
The company raised its full-year earnings guidance, now expecting adjusted EPS between $9.00 and $9.70, up from a previous range of $8.60 to $9.60. However, Target expects year-over-year comparable sales growth to be in the lower half of its previously stated range of 0% to 2%.
For the third quarter, Target forecasts comparable sales growth of 0% to 2% and adjusted EPS between $2.10 and $2.40.
The retailer noted improving trends across all selection categories, with comparable goods sales growing more than 3% in the quarter. Target also reported continued strength in its beauty division.
After the results, Wall Street analysts were quick to share their thoughts:
Roth MKM: “Target's 2Q (comp sales/profit beat) mitigates both fears of increased competition and a weak consumer.”
Jefferies: “Discretionary segment trends continue to improve with apparel growing by more than 3 basis points. GM expanded ~190bps helped by sales initiatives. As a result, OM of 6.4% was ahead of consensus.”
Morgan Stanley: “Target [is] making it between a solid background. Strong Q2, FY guidance not bullseye, but better than expected downgrade.”
Baird: “Complete, encouraging results and a fairly measured outlook. Expect stocks to respond well. Again Good Work”
Oppenheimer: “Overall we're looking pretty good at delivering a better-than-expected Q2 from Target by setting very low expectations.”
Analysts: “Overall, TGT posted strong results, with $2.57 EPS ahead of our $2.24 and $2.19 Street per Consensus Metrix, driven by better-than-expected sales growth and a bigger margin beat.”
Analysts: “TGT posted a better-than-expected quarter, with comp sales +2% (consensus +1.3% / we believe the buy bar was +1.5%) and adj. EPS +42% y/y to -$2.57 ($2.17 deal) .”
