TGT Stock Climbs to New Highs Heading into Target's Q2 Earnings
Target TGT shares have surged over 14% in the last month to outpace the broader retail sector. This run includes Friday’s jump that pushed TGT stock to another new high heading into the release of its second quarter fiscal 2020 financial results that are due out on Wednesday, August 19.
Pandemic Highlights E-Commerce Push
Target, like nearly every other major player in retail, has gone all in on e-commerce in order to grow during the Amazon AMZN age. This push includes bolstered digital offerings, delivery, curbside pick, and more. And the retailer’s expansion paid off big time during its first coronavirus quarter.
TGT’s first quarter revenue jumped 11.3%, with comparable sales up 10.8% for the three-month period ended on May 2. This growth was spurred by a 141% surge in digital comps. The Minneapolis-based firm also noted that its same-day offerings, which include Order Pick Up, Drive Up, and Shipt, skyrocketed 278% and accounted for roughly “5 percentage points of total Company comparable sales growth.”
In another sign of strength, Target announced in early June that it raised its quarterly dividend by 3% to $0.68 per share. TGT’s dividend yield currently sits at 1.99%, which tops the S&P 500’s average and rival Walmart’s WMT 1.63%.
On top of that, TGT stock has climbed roughly 70% over the last two years to outpace Walmart 47% and Amazon’s 68%. Target hit a brand new intraday high of $137 a share through late afternoon trading on Friday.
Outlook
Moving on, our current Zacks estimates call for Target’s second quarter revenue to climb another 6.6% to $19.64 billion. Peeking further ahead, its Q3 sales growth is expected to slow, with our estimates calling for 3.2% top-line expansion.
The bottom end of the income statement looks far less impressive, as it’s negatively impacted by the coronavirus environment. Target’s adjusted Q2 earnings are projected to sink by 16.6% to $1.52 a share, with Q3 expected to slip by 7%.
Target currently holds a Zacks Rank #3 (Hold), alongside “B” grades Value and Growth and an “A” for Momentum our Style Scores system. TGT has also seen its Q2 and Q3 earnings estimates climb in the last seven days.
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