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Target (TGT) Rallies on Q3 Earnings & Sales Beat, Ups View

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Target Corp. (TGT - Free Report) , department store retailer, came out with third-quarter fiscal 2016 results, wherein adjusted earnings from continuing operations came in at $1.04 per share that substantially surpassed the Zacks Consensus Estimate of 83 cents and rose 22.1% year over year.

Earnings Estimate Revision: The Zacks Consensus Estimate for fiscal 2016 has been stable in the last 30 days. In the trailing four quarters, including quarter under review, the company outperformed the Zacks Consensus Estimate by an average of 9.8%.

TARGET CORP Price and EPS Surprise

TARGET CORP Price and EPS Surprise | TARGET CORP Quote

Revenues: Target generated net sales of $16,441 million that decreased 6.7% year over year but topped the Zacks Consensus Estimate of $16,318 million. Though the company’s sales were impacted by a 0.2% fall in comparable store sales and absence of pharmacy and clinic revenues, the top line beat reflected from an improvement in traffic and sales trends.

Key Events: Target returned $1.2 billion to its shareholders in the form of share repurchases and dividend payments. The company bought back shares worth $878 million and paid dividends of $345 million in the reported quarter. Further, the company authorized a new share repurchase program worth $5 billion in September. The company expects to start repurchasing shares under this program following the completion of its current $10 billion authorization. At the end of the fiscal third quarter, the company had about $300 million remaining to be bought back under the current plan.

Outlook: Following the robust quarterly performance, Target raised its outlook for the fourth quarter and fiscal 2016. The company now envisions adjusted earnings in a band of $5.10–$5.30 per share, compared with $4.80–$5.20 per share expected earlier.

For the fourth quarter fiscal 2016, the company expects both GAAP and adjusted earnings per share in the range of $1.55–$1.75. Further, management now projects comparable sales for the fiscal fourth quarter in the range of down 1% to up 1%, against the previous guidance of negative 2% to flat.

Zacks Rank: Currently, Target carries a Zacks Rank #4 (Sell) which is subject to change following the earnings announcement.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stock Movement: Target’s shares escalated nearly 6% during pre-market trading hours following the earnings release.   

Check back later for our full write up on Target’s earnings report!

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