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Analysts Expect Target’s Earnings to Fall in 3Q17

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Analysts Expect Target’s Earnings to Fall in 3Q17 PART 1 OF 5

Target Stock Could Benefit from Its Fiscal 3Q17 Results

Target’s 3Q17 results

Target (TGT) will announce its fiscal 3Q17 results on November 15, 2017. On average, analysts expect Target’s sales to improve on a YoY (year-over-year) basis. Its growth initiatives including store remodeling, opening new small-format stores, expanding exclusive brands, and lower pricing are expected to drive Target’s store traffic and top line.

Target’s e-commerce business is projected to report strong sales due to continued investments and customer-friendly offerings like the next-day delivery program.

Target Stock Could Benefit from Its Fiscal 3Q17 Results

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However, Target’s earnings are expected to mark a double-digit decline in fiscal 3Q17, which reflects price investments, increased digital fulfillment costs, and heightened competition in the food and beverages segment from Amazon (AMZN), Walmart (WMT), and Costco (COST). The tax rate is expected to remain low, which should support the bottom-line growth.

Stock performance

Target shares have fallen 19.9% on a YTD (year-to-date) basis as of November 7, 2017. Since the beginning of the year, the S&P 500 Index (SPX-INDEX) has risen 15.7%. Target stock took a beating in the past due to sluggish sales and increased competition. The stock recovered as the company’s growth initiatives started to gain traction. However, pressure on its earnings from increased investments could restrict the stock’s upside potential in the near term.

On a year-to-date basis, Walmart stock has risen 28.7%, while Costco stock has risen 8.1%.

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