Target (TGT) Stock: Here’s Why It’s Tanking

Target Corporation (NYSE: TGT)

Target is having an incredibly rough start to the trading session today, and for good reason. The company reported its earnings early this morning. While it had a positive quarter with regard to earnings, it’s not expecting such strength in Q2, and that’s concerning investors. Today, we’ll talk about what we saw from the report, how investors are reacting to the news, and what we can expect to see from TGT moving forward. So, let’s get right to it…

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TGT Reports Earnings

As mentioned above, Target reported its earnings for the first quarter before the opening bell this morning. While earnings per share were a hit, the rest of the report left much to be desired. Here’s what we saw:

  • Earnings Per Share – When it comes to earnings per share, TGT was expected to generate $1.19 in the quarter. However, the company absolutely blew away these expectations, coming in $0.10 higher at $1.29 per share.
  • Revenue – In terms of revenue, TGT slightly missed the mark. During the quarter, analysts expected that the company would produce revenue in the amount of $16.32 billion. However, the company actually reported that revenue came in at $16.2 billion, falling slightly short of analyst expectations.
  • Guidance – While there’s not much to be concerned with when it comes to revenue and earnings, there was an area of the report that seemed to be incredibly concerning. That area is guidance. Target announced that it is expecting to generate earnings per share in the second quarter in the range between $1.00 and $1.20. While this seems positive, it falls well short of analyst expectations of $1.36 per share.

Although guidance proved to be a miss, it was overwhelmingly clear that the chairman and CEO at TGT saw the quarter as positive overall. Here’s what he had to say in a statement:

We are pleased with our first quarter financial results, which demonstrate the effectiveness of our strategy in an increasingly volatile consumer environment… First quarter comparable sales in signature categories grew more than three times the Company average, digital comparable sales grew 23 percent, and strong execution by our team delivered stronger-than-expected growth in Adjusted EPS. With an outstanding team, a resilient business model and a strong balance sheet, we plan to successfully implement our long-term strategy, even in the face of a challenging short-term consumer landscape.”

How The Market Reacted To The News

As investors, one of the first things that we learn is that the news moves the market. Any time there is positive news announced with regard to a publicly-traded company, we tend to see gains in the stock associated with the company the news revolves around. Adversely, negative news will generally lead to declines. While earnings came in well ahead of expectations, guidance proved to be a major issue for TGT, and that is concerning to investors. As a result, we’re seeing heavy declines on the stock at the moment. Currently (9:07), TGT is trading at $67.75 per share after a loss of $5.84 per share or 7.94% thus far today.

What We Can Expect To See Moving Forward

Moving forward, I have a relatively mixed opinion of what we can expect to see from Target. For the next quarter or so, I think that concerns with regard to sales growth will likely keep a resistance cap on top of the stock, limiting its growth. However, TGT is struggling thanks to dwindling economic conditions and poor consumer spending. As economic conditions improve, I believe that we will see strong improvements in TGT, leading to long-run gains on the stock.

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What Do You Think?

Where do you think TGT is headed moving forward and why? Let us know your opinion in the comments below!

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