Target Stock Tumbles on Earnings Miss

Target Corporation (TGT) stock dropped more than 9 percent on Tuesday after the company reported higher-than-expected costs and margins and missed Wall Street earnings expectations. Analysts say there are still plenty of things to like about TGT stock despite the mixed quarter.

Target reported adjusted earnings per share of $1.09, below consensus analyst estimates of $1.12. Revenue of $17.82 billion narrowly beat Wall Street expectations of $17.80 billion. Revenue was up 5.6 percent from a year ago.

Same-store sales were up 5.1 percent, slightly below the 5.2 percent growth analysts had expected. Same-store sales growth was driven by a 5.3 percent increase in store traffic, down from a record 6.4 percent growth last quarter. Average transaction size was down 0.2 percent in the third quarter.

One of the few major bright spots for TGT stock investors in the third quarter was digital sales growth of 49 percent. Digital sales represented just 6 percent of total sales in the quarter.

“We plan to leverage our current momentum into 2019, when we’ll achieve greater scale across the full slate of our initiatives – creating efficiencies and cost-savings, further strengthening our guest experience and positioning Target for profitable growth in the years ahead,” CEO Brian Cornell says in a statement.

Looking ahead, Target issued fourth-quarter same-store sales growth guidance of 5 percent, roughly in-line with its year-to-date performance. Target also reiterated its previous full-year EPS guidance of between $5.30 and $5.50. Target previously guided for full-year same-store sales growth of 4.8 percent. The company said it will be providing investors with a post-holiday financial update on January 10, 2019.

Bank of America analyst Robert Ohmes says online sales growth far exceeded his expectations, but digital fulfillment is weighing on Target’s gross margin.

“TGT’s digital sales grew an impressive 49 percentin the quarter, helped by the rollout of Shipt same-day delivery to more markets and the expansion of TGT’s new drive-up service,” Ohmes says. “We continue to view Target shares as a top pick despite the disappointing (third quarter).”

Bank of America has…

Click here to continue reading

Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!