Target (TGT) Advances While Market Declines: Some Information for Investors

For Immediate Releases

Chicago, IL – November 12, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include including The Home Depot Inc. HD, Walmart Inc. WMT and Target Corp. TGT.

Here are highlights from Tuesday’s Analyst Blog:

3 Retail Giants Poised to Beat on Earnings This Month

We are in the last leg of the third-quarter 2024 earnings season. So far earnings results have been better than expected. Major companies in most sectors have already reported their quarterly financial numbers. However, the retail sector remains a notable exception.

We have selected three retail behemoths for investors’ that will report earnings results in the next 10 days. These stocks, with a favorable Zacks Rank, are likely to beat third-quarter earnings estimates.

The combination of a likely earnings beat and a favorable Zacks Rank should drive their stock prices in the near term. These companies are — The Home Depot Inc. , Walmart Inc. and Target Corp.

Third-Quarter Earnings Season So Far

As of Nov 8, 452 S&P 500 companies have reported their quarterly financial numbers. Total earnings of these companies are up 7.1% year over year on 5.5% higher revenues, with 73.5% beating earnings per share (EPS) estimates and 61.5% beating revenue estimates.

Looking at the third quarter as a whole, total earnings for the S&P 500 Index are expected to be up 7.4% from the same period last year on 5.6% higher revenues. This follows 10.2% year-over-year EPS growth on 5.5% higher revenues in the previous quarter.

Find the latest earnings estimates and surprises on ZacksEarnings Calendar.

3 Big Retailers to Buy Ahead of Earnings Results

We have narrowed our search to three giant retailers that will report earnings results within next week. Each of our picks carries a Zacks Rank #2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that for stocks with the combination of a Zacks Rank #3 or better (Rank #1 or 2) and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings release. You can uncover the best stocks to buy or sell before they’re reported with ourEarnings ESP Filter.

The Home Depot Inc.

The Home Depot is gaining from its “One Home Depot” plan focused on technology, expanding supply-chain facilities, and improving the digital experience. HD’s interconnected retail strategy and strong technology infrastructure have consistently boosted web traffic in recent quarters.

The Home Depot is also advancing investments to build a Pro ecosystem. HD’s sales saw a modest recovery in second-quarter fiscal 2024 driven by contributions from the recent SRS acquisition. HD has an Earnings ESP of +4.09%. The company will report on Nov 12, before the opening bell.

HD has an expected revenue and earnings growth rate of 3.2% and a negative 0.7%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.01% over the last 30 days.

Walmart Inc.

Walmart has been benefiting from its diverse business model that spans multiple segments, channels, and formats. WMT’s strong omnichannel strategy has boosted traffic across both physical stores and digital platforms.

WMT emphasis on improving delivery services has been successful, contributing to steady grocery market share gains. Upsides like these, along with growth in the advertising business, and e-commerce sales surge have benefited it. Walmart has an Earnings ESP of +1.61%. The company will report on Nov 19, before the opening bell.

WMT has an expected revenue and earnings growth rate of 4.7% and 9.9%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last 90 days.

Target Corp.

Target has positioned itself as a formidable player by adapting to evolving market dynamics and shifting customer preferences. Through a strong focus on innovation, enhancing customer experience, and improving operational efficiency, TGT has laid a solid foundation.

Target's commitment to delivering value, expanding margins, and fostering customer loyalty through strategic initiatives enhances its investment appeal. We noted that comparable sales grew 2% in the second quarter. This growth stemmed from a 3% rise in customer traffic. TGT has an Earnings ESP of +0.73%. The company will report on Nov 20, before the opening bell.

TGT has an expected revenue and earnings growth rate of a minus 0.6% and 6.8%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last seven days.

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The retail sector is in focus with big retailers like Home Depot HD, Lowe’s LOW, Wal-Mart WMT and Target TGT, as well as store channels like Nordstrom JWN and Kohl’s KSS, due to report earnings.

So far, 23 out of 34 retailers on the S&P 500 Index have already reported. Earnings of these companies are up 17.3% from the same period last year on 6.3 higher revenues, with 52.2% beating EPS estimates and 47.8% beating revenue estimates. Overall, the retail sector is expected to report earnings growth of 18% on 6.3% revenue growth.

Given this, traditional retail ETFs are in focus. SPDR S&P Retail ETF XRT and VanEck Vectors Retail ETF RTH have gained nearly 5% each over the past month.

Stay up-to-date with all quarterly releases:See Zacks Earnings Calendar.

What Our Model Unveils for Retailer Earnings

According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Home Depot has an Earnings ESP of +4.09% and a Zacks Rank #2. The company saw a positive earnings estimate revision of a penny over the past seven days for the to-be-reported quarter. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The company delivered an average earnings surprise of 1.64% in the last four quarters. Home Depot is scheduled to report on Nov. 12, before market open.

Lowe’s has an Earnings ESP of +2.00% and a Zacks Rank #3. The company saw no earnings estimate revision for the to-be-reported quarter over the past 30 days and delivered an earnings surprise of 3.33%, on average, in the last four quarters. LOW is slated to report earnings on Nov. 19.

Wal-Mart has an Earnings ESP of +1.61% and a Zacks Rank #2. The company saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. Wal-Mart delivered an average four-quarter earnings surprise of 6.89%. Wal-Mart is scheduled to report on Nov. 19, before market open (see: all the Consumer Discretionary ETFs here).

Target has an Earnings ESP of +0.73% and a Zacks Rank #2. The company saw no earnings estimate revision over the past month for the to-be-reported quarter. It delivered an earnings surprise of 20.26% for the last four quarters. Target will report earnings on Nov. 20, before the opening bell.

Nordstrom has an Earnings ESP of 0.00% and a Zacks Rank #3. It saw no earnings estimate revision for the to-be-reported quarter over the past 30 days. The company delivered a negative earnings surprise of 17.82%, on average, over the past four quarters. It is scheduled to report earnings on Nov. 26 after the closing bell.

Kohl’s has an Earnings ESP of -2.07% and a Zacks Rank #2. It saw no earnings estimate revision for the to-be-reported quarter in the past month. Kohl’s delivered a negative average earnings surprise of 145.30% in the last four quarters. The company is slated to report before the opening bell on Nov. 26.

ETFs in Focus

SPDR S&P Retail ETF (XRT)

SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure across large-, mid- and small-cap stocks. It holds 78 well-diversified stocks in its basket, with none making up for more than a 2.3% share. Additionally, SPDR S&P Retail ETF is well spread across various industries with a double-digit allocation each in automotive retail, specialty retail, apparel retail and broad-line (read: Will Trump's Tariffs Fuel Inflation? ETFs in Focus).

SPDR S&P Retail ETF is the largest and most popular in the retail space, with AUM of $382.5 million and an average trading volume of 4 million shares. It charges 35 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.

VanEck Vectors Retail ETF (RTH)

VanEck Vectors Retail ETF provides exposure to the 26 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. VanEck Vectors Retail ETF is highly concentrated on the top firm with nearly 21% exposure, while the other firms hold no more than 9% share.

VanEck Vectors Retail ETF has amassed $228.5 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 2,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #3 with a Medium risk outlook.

Zacks Investment Research