Target (TGT) Q3 earnings preview: 4 key metrics to watch

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Target Corporation (NYSE: TGT) is scheduled to report third quarter 2019 earnings results on Wednesday, November 20, before the market opens. These are the four key metrics to keep an eye on during the report:

Revenue

Target has posted consistent revenue growth over the past two quarters helped by healthy comparable store sales as well as business growth initiatives. In the second quarter of 2019, revenue grew 4% to $18.42 billion. For the third quarter, analysts have forecast revenue of $18.49 billion.

Target Q2 profit tops estimates, lifts FY19 forecast

Earnings

Over the past two quarters, the retailer has seen double-digit growth in adjusted EPS. Higher revenue and strong traffic have fueled the bottom line results. Last quarter, adjusted EPS improved 24% to $1.82. For the third quarter, the consensus target is for earnings of $1.19 per share, which compares to EPS of $1.09 reported a year earlier.

Comp sales

Target has delivered healthy comparable store sales growth over past quarters, helped by strong traffic and growth in digital channel sales. Last quarter, comparable sales grew 3.4% while comparable digital channel sales rose 34%. This trend is expected to continue in the third quarter.

Also read: Target Q2 2019 Earnings Conference Call Transcript

Outlook

For the third quarter of 2019, Target has guided for GAAP EPS from continuing operations and adjusted EPS of $1.04 to $1.24. The company expects comparable sales growth in line with the previous quarter.

Last quarter, Target raised its fiscal 2019 GAAP EPS from continuing operations and adjusted EPS guidance to a range of $5.90 to $6.20 from the previous estimate of $5.75 to $6.05. It is worth noting if the company raises its guidance further during the third quarter earnings report.

To sum it up

Target has been investing in remodeling its stores and improving its same-day fulfillment services which have helped drive significant growth. Last quarter, same-day fulfillment services comprised around 1.5% of overall comps. All in all, Target appears poised to deliver strong Q3 results.  

Last month, Target named Michael Fiddelke as the new CFO, effective November 1. Target’s shares have gained 69% year-to-date and 33% over the past three months.

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