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Target Corporation (TGT) Stock Just Earned a Spot Back on Your Watchlist

Same store sales should be up rather than down for the quarter currently underway

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The last couple of years haven’t been good ones for retailer Target Corporation (NYSE:TGT), or for owners of TGT stock. Some ill-advised strategic decisions coupled with continued competitive pressures from Wal-Mart Stores Inc (NYSE:WMT) and, Inc. (NASDAQ:AMZN) pulled Target shares nearly 40% lower from their mid-2015 high, with investors correctly foreseeing last year’s 5% slide in revenue and 19% year-over-year decline in earnings.

Target Corporation (TGT) Stock Just Earned a Spot Back on Your Watchlist
Source: Shutterstock

But with all that said, it’s possible the worst for Target may be in the rear-view mirror. This morning, the company updated its guidance for the quarter currently underway, and TGT stock jumped more than 5% on the good news.

TGT Stock: Growing Again?

The official statement didn’t divulge much in the way of numerical details, but Target Corporation confirmed Thursday morning that its same-store sales for Q2 would be up modestly. Analysts were expecting another decline, this one to the tune of 1.2%.

CEO Brian Cornell explained:

“Target’s recent progress reinforces our confidence and commitment to our strategy as we build an even better Target for tomorrow. Following better-than-expected results in the first quarter, we’ve seen additional, broad-based improvement in traffic and category sales trends in the second quarter, despite continued challenges in the competitive environment. Our team is energized and focused on enhancing and modernizing the Target shopping experience, and our guests are responding.”

At least part of that strategy includes competing with the aforementioned Walmart and Amazon on price … something the retailer had mostly shied away from in the past, choosing instead to focus on delivering a more premium shopping experience.

Lower prices seem to be paying for themselves though, drawing more foot traffic into its stores, and to its e-commerce venue. Target suggested it would be posting a profit near the upper end of its previous guidance range of between 95 cents and $1.15 per share. Bolstering that figure between 5 and 9 cents is a tax benefit related to the company’s global outsourcing operations, though an unfavorable tax matter is crimping the bottom line between 2 and 3 cents.

Analysts were collectively calling for a second-quarter bottom line of $1.06 per share of TGT stock … a figure that’s now apt to be beat.

Still, that’s notably less than the $1.23 per share the retailer earned in the second quarter of last year, and while same-store sales should be up slightly, mum was the word on total revenue. Experts were calling for a top line of $16.02 billion, down 0.9% on a year-over-year basis.

To that end, Kantar Retail analyst Leon Nicholas commented “You also have to consider they had set the bar pretty low … They had said to look at this year like a transition year.”

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