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Why Target’s Q2 EPS Could See Double-Digit Growth

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Analyst estimates

Target (TGT) impressed investors with its first-quarter bottom-line performance. The company’s EPS returned to the growth trajectory after seeing declines over the past several quarters. Moreover, analysts expect Target to sustain growth momentum and mark double-digit growth during the fiscal second quarter, which is encouraging.

Analysts expect Target to report adjusted earnings of $1.40 per share in the fiscal second quarter, which reflects a YoY (year-over-year) growth rate of 13.8%.

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What’s behind the strong earnings?

Target’s fiscal second-quarter EPS are expected to benefit from improvement in comparable-store sales. Moreover, improved mix, cost savings, and lower interest expenses should further support the bottom-line growth rate. Also, share repurchases and lower taxes are expected to cushion the company’s bottom line.

The company’s management expects its adjusted EPS to be in the range of $1.30–$1.50 in the fiscal second quarter. Meanwhile, the fiscal 2018 earnings are expected to be in the range of $5.15–$5.45. Management expects lower taxes and a decline in interest expenses to support bottom-line growth.

The company’s peers have also seen strong bottom-line performances. For instance, Walmart’s (WMT) EPS grew 14% during the last reported quarter. Meanwhile, analysts expect Walmart’s adjusted EPS to see 13% growth in the second quarter.

Moreover, Costco (COST) continues to generate stellar bottom-line growth and has outperformed both Target and Walmart with its EPS growth rate. Analysts expect Costco’s bottom line to grow at a breakneck pace in the upcoming quarter.

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