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Target Beat Analysts’ Q4 Estimates Due to Stellar Comps

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Mar. 5 2019, Published 1:06 p.m. ET

Key takeaways

On March 5, Target (TGT) reported impressive fourth-quarter results for the period ending February 3. Target’s total revenues remained flat on a YoY (year-over-year) basis. Target’s total revenues beat analysts’ estimate due to strong comparable sales growth in stores and online. Target’s comparable sales increased 5.3% during the fourth quarter, which reflected a contribution of 2.9% from stores and 2.4% from digital sales.

The traffic remained strong and rose 4.5% due to the company’s expanded digital fulfillment options, exclusive brands, store remodeling, and value pricing. Target witnessed healthy growth across all of the merchandise categories and reported market share gains.

Walmart (WMT) had impressive comps growth during the last reported quarter. Walmart’s comps grew 4.2% in the fourth quarter due to an increase in the ticket size and traffic. Analysts expect Costco (COST) to also have an impressive sales performance. 

Target’s adjusted EPS marked double-digit growth and beat analysts’ estimate,  which reflected improved comps, lower interest expenses, and share repurchases.

For fiscal 2018, Target’s comps rose 5%—the highest since 2005. The company’s adjusted EPS recorded double-digit growth.

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Key financial metrics

Target reported total revenues of $23.0 billion, which remained flat on a YoY basis but marginally beat analysts’ estimate. The comps rose 5.3%, while digital sales rose 31%. Target’s gross profit margin remained weak, which reflected higher digital fulfillment charges and supply-chain costs. However, a decline in the SG&A rate supported the company’s operating margin, which remained flat.

Target posted an adjusted EPS of $1.53, which increased 12.5% on a YoY basis and beat analysts’ estimate of $1.52.  

Target shares were trading more than 6% higher in the pre-market session.

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