Target (TGT) is the worst S&P 500 stock Wednesday, down more than 20% at last check, after the big-box retailer came up short of top- and bottom-line expectations for its fiscal third quarter and slashed its full-year outlook.
In the three months ended November 2, Target's revenue increased 0.9% year over year to $25.7 billion, buoyed by a 0.3% increase in same-store sales. Its earnings per share (EPS) declined 11.9% from the year-ago period to $1.85.
"We saw several strengths across the business, including a 2.4% increase in traffic, nearly 11% growth in the digital channel, and continued growth in beauty and frequency categories," said Target CEO Brian Cornell in a statement. "At the same time, we encountered some unique challenges and cost pressures that impacted our bottom-line performance."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results fell short of analysts' expectations. Wall Street was anticipating revenue of $25.9 billion and earnings of $2.30 per share, according to Yahoo Finance.
For its fourth quarter, Target said it expects approximately flat same-store sales and EPS in the range of $1.85 to $2.45. The midpoint of its earnings-per-share forecast, $2.15, came in significantly below the $2.62 per share analysts were calling for.
For the full fiscal year, Target said it now expects earnings per share to arrive between $8.30 to $8.90, down from its previous forecast for earnings of $9 to $9.70.
"Looking ahead, our team is energized and ready to deliver the unique combination of newness and value that holiday shoppers can only find at Target, and we remain confident in the underlying strength and fundamentals of our business, and our ability to deliver on our longer-term financial goals," Cornell said.
Is Target stock a buy, sell or hold?
Heading into Wednesday's session, Target was already lagging the broad market Wall Street is bullish on the big box retailer – up 12% for the year to date on a total return basis (price change plus dividends) vs the S&P 500's 26% gain. But Wall Street was keeping the faith on the consumer staples stock.
According to S&P Global Market Intelligence, the average analyst target price for TGT stock is $173.13, representing implied upside of nearly 12% to its October 19 close. Additionally, the consensus recommendation is Buy. Price-target reductions and/or downgrades could come down the pike following the dismal earnings report.
Financial services firm Oppenheimer is is standing firm on its Outperform rating (equivalent to a Buy) and $156 price target – and thinks that investors should buy the dip on the large-cap stock.
"Earlier this morning, Target reported softer-than-expected third-quarter results. As we telegraphed in our preview, we expected a material comp and earnings shortfall vs Street forecasts, but this was deeper than we anticipated on the bottom line," says Oppenheimer analyst Rupesh Parikh.
"For longer-term players, we would take advantage of the dip this morning," he adds. "The pullback is much greater than we envisioned with our preview where we viewed downside in the mid-$130s/low $140s."
Related Content
- Nvidia Earnings: Updates and Commentary
- Kiplinger's Earnings Calendar for This Week
- Get Ready To Shop Target's Cyber Monday Deals
- Why Walmart Stock's a Buy After Its Beat-And-Raise Quarter
-
A Lesson From the School of Rock About the MarketsIt's hard to hold your nerve during a downturn, but next time the markets take a tumble, remember this quick rock 'n' roll tutorial and aim to stay invested.
-
I retired at 65 with $7.8 million and feel like I over-saved. My 40-something son is on the same path. Should I tell him to reconsider?We ask financial experts for advice.
-
A Lesson From the School of Rock (and a Financial Adviser) as the Markets Go Around and Around
It's hard to hold your nerve during a downturn, but next time the markets take a tumble, remember this quick rock 'n' roll tutorial and aim to stay invested.
-
I'm a Financial Pro: This Is How You Can Guide Your Heirs Through the Great Wealth TransferFocus on creating a clear estate plan, communicating your wishes early to avoid family conflict, leaving an ethical will with your values and wisdom and preparing them practically and emotionally.
-
To Reap the Full Benefits of Tax-Loss Harvesting, Consider This Investment Strategist's StepsTax-loss harvesting can offer more advantages for investors than tax relief. Over the long term, it can potentially help you maintain a robust portfolio and build wealth.
-
Social Security Wisdom From a Financial Adviser Receiving Benefits HimselfYou don't know what you don't know, and with Social Security, that can be a costly problem for retirees — one that can last a lifetime.
-
Take It From a Tax Expert: The True Measure of Your Retirement Readiness Isn't the Size of Your Nest EggA sizable nest egg is a good start, but your plan should include two to five years of basic expenses in conservative, liquid accounts as a buffer against market volatility, inflation and taxes.
-
Dow Adds 472 Points After September CPI: Stock Market TodayIBM and Advanced Micro Devices created tailwinds for the main indexes after scoring a major quantum-computing win.
-
October Fed Meeting: Live Updates and CommentaryThe October Fed meeting is a key economic event, with Wall Street waiting to see what Fed Chair Powell & Co. will do about interest rates.
-
The Delayed September CPI Report is Out. Here's What it Signals for the Fed.The September CPI report showed that inflation remains tame – and all but confirms another rate cut from the Fed.
