Target stock rallied early Tuesday to its highest level since April after the retail giant trounced fourth-quarter earnings expectations.
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Target (TGT) earnings increased 57.7% to $2.98 per share to mark seven consecutive quarters of gains. Revenue rose 1.7% to $31.9 billion, reversing two quarters of declines.
FactSet analysts expected a 28% earnings increase to $2.42 per share on 1.4% revenue growth to $31.82 billion.
Comparable sales gained 4.4% during the fourth quarter, coming in just ahead of the FactSet target for a 4.5% decline. Same store sales fell 5.4%, while comparable digital sales eased 0.7%.
Target’s gross operating margin rate improved to 25.6% from 22.7% due to lower markdowns and inventory-related costs, freight costs, supply chain and digital fulfillment costs. Shrink costs, retailer jargon for inventory theft, were lower than a year ago as store loss rates were “more than offset” by the timing of inventory accruals, Target reported.
Full-year earnings increased 48.5% to $8.94 per share on a 1.6% revenue decline to $107.4 billion. The results marked Target’s first full-year revenue decline in six years.
Outlook
Target guided Q1 earnings to between $1.70 and $2.10 per share, and comparable sales to decline 3% to 5%. Wall Street forecasts first-quarter earnings will rise about 1.5% to $2.08 per share on a 2.7% revenue slip, to $24.63 billion.
The retailer sees full-year earnings ranging from $8.60 to $9.60 per share with flat comparable sales — a 2% increase. FactSet analysts expect 2024 earnings will rise 2.4% to $9.15 per share, with sales down 0.7% to $106.6 billion.
Dow Jones rival Walmart (WMT) on Feb. 20 posted a better-than-expected Q4 earnings report. However, the midpoint of Walmart’s full-year earnings outlook came in short of Wall Street forecasts.
Target Stock
TGT stock leapt 8.4% premarket Tuesday, on track to open at its highest price since April 2023.
Target stock is working up the right side of a 57-week cup base with a 181.70 buy point, MarketSurge charts show.
Shares climbed 5.7% so far in 2024 through Monday’s close.
WMT stock ticked up slightly early Tuesday. Walmart shares are extended above a buy zone following a cup-with-handle base break out in late January.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
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