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Category: Stock Market and Target Corporation (TGT)
Date: 23 November 2020 Target (TGT) Stock Price: $172.31 We take a look at the 3rd quarter 2020 earnings report of Target, one of the biggest retailers in the USA. The group reported sales of $22.3 billion and net income of $1.014 billion for the quarter in question.
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Our strong results in 2020 reflect the benefits of our multi-year effort to build a durable and flexible model, with a differentiated assortment and a suite of industry-leading fulfillment options -- all brought to life through the passion and effort of our team. As a result, we've seen a deepening level of engagement and trust from our guests "
About Target Corporation
Minneapolis-based Target Corporation (NYSE: TGT) serves guests at nearly 1,900 stores and at Target.com. Target is currently ranked as the 8th biggest retailer in the USA and is part of the S&P 500 index.
Overview of Target's 3rd quarter 2020 earnings report
Data below refers to the latest quarters data unless specified otherwise:
- Total Revenue: $22.6 billion (up from $18.6 billion for the same quarter of the previous year)
- Revenue increased by 21.3% over the last 12 months
- Cost of sales: $15.5 billion (up from $12.9 billion for the same quarter of the previous year)
- Cost of sales increased by 19.9% over the last 12 months
- Some margin gain for Target Corporation as their total revenues increased at a slightly faster rate than their cost of sales
- Net earnings: $1.014 billion (up 41.9% from $7.14 million for the same quarter of the previous year)
- Diluted earnings per share: $2.01 (up from $1.39 for the same quarter of the previous year)
- PE ratio of Target: 21.9
- Cash dividends per share: $ 0.68 (up from $0.66 for the same quarter of the previous year)
- Dividend yield of Target Corporation: 1.6%
- Diluted number of shares in issue: 505.4 million (down from 514.8 million for the same quarter of the previous year)
- Cash and cash equivalents: $5.996 billion
- Cash and cash equivalents per share: $11.86
- Cash and cash equivalents makes up 6.8% of Target's market capital
- Cash and cash equivalents makes up 11.8% of Target's total assets
- Inventories: $12.7 billion
- Inventories makes up 25.1% of Target's total assets
- Total stockholders equity in Target Corporation: $13.319 billion
- Stockholders equity per share: $26.35
- Target is trading at 65 times its stockholders equity per share, which is well outside the expected range of between 2 and 4 times that most firms tend to trade at
- The average price to book value of firms in the S&P 500 is currently at 3.9
- Cash generated from operations for 9 months: $7 billion
- Cash generated from operations per share (for 9 months): $13.85
Target's management commentary on their 3rd quarter 2020 earnings report
MINNEAPOLIS, Nov. 18, 2020 /PRNewswire/ --
- Third quarter comparable sales grew 20.7 percent
- Comparable traffic grew 4.5 percent, and average ticket grew 15.6 percent
- Store comparable sales increased 9.9 percent
- Digital comparable sales grew 155 percent, accounting for 10.9 percentage points of Target's comparable sales growth
- Same-day services (Order Pick Up, Drive Up and Shipt) grew 217 percent
- More than 95 percent of Target's third quarter sales were fulfilled by its stores
- Throughout the third quarter, the Company continued to gain market share across all five of its core merchandising categories. Year to date, the Company has gained more than $6 billion in market share.
- Third quarter GAAP EPS from continuing operations of $2.01 was 46.3 percent higher than last year. Third quarter Adjusted EPS1 of $2.79 was 105.1 percent higher than last year, as strong operating performance offset continued investments in team member pay and benefits and safety measures to protect guests and team members.
- For additional media materials, please visit: https://corporate.target.com/article/2020/11/q3-2020-earnings
"Our strong results in 2020 reflect the benefits of our multi-year effort to build a durable and flexible model, with a differentiated assortment and a suite of industry-leading fulfillment options -- all brought to life through the passion and effort of our team. As a result, we've seen a deepening level of engagement and trust from our guests. The result is unprecedented market share gains and historically strong sales growth, both in our stores and our digital channels," said Brian Cornell, chairman and chief executive officer of Target Corporation. "In preparation for the holiday season, we focused first on the safety of our guests and our team, making changes to eliminate crowds while enhancing our fast-growing, contactless options like in-store pickup, Drive Up and Shipt. In a holiday season that will feel different for our guests, we're committed to helping them navigate the season safely, as they find new ways to celebrate with family and friends."
Fiscal 2020 Guidance
During the first quarter, the Company withdrew its guidance given the unusually wide range of potential outcomes, in light of the highly fluid and uncertain outlook for consumer shopping patterns and the impact of COVID-19.
Fiscal 2020 Guidance
During the first quarter, the Company withdrew its guidance given the unusually wide range of potential outcomes, in light of the highly fluid and uncertain outlook for consumer shopping patterns and the impact of COVID-19.
Target Corporation (NYSE: TGT) stock price history
The image below, obtained from Google shows Target's stock chart for the last 5 years. It's been an ok time for Target stockholders over the last 5 years. 5 years ago the stock of Target was trading at around $73 and its currently trading at $172.31. That'ss a very strong 136% return provided to Target stockholders over the last 5 years.
The stock of Target is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Target's stock price is positive at this point in time
The stock of Target is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Target's stock price is positive at this point in time
Target (TGT) vs Walmart (WMT) vs Kroger (KR) over the last 5 years
The image below shows the stock performance of Target (TGT) vs Walmart (WMT) vs Kroger (KR) over the last 5 years. All three firms are active in the retail space in the USA. But looking at the stock price performances of these firms it doesn't look like both of them are active in the same space as their stock price performances are totally different. The summary below shows the stock price performance of these firms over the last 5 years:
The stock of Walmart (WMT) has easily outperformed the stock of Target and Kroger over the last 5 years.
- Walmart (WMT): 154.7%
- Target (TGT): 136%
- Kroger (KR): -22.6%
The stock of Walmart (WMT) has easily outperformed the stock of Target and Kroger over the last 5 years.
Recent coverage of Target (TGT)
The extract below discusses the latest regarding Target as obtained from CNBC.com
Big-box discount chain Target (TGT) obliterated second-quarter forecasts early Wednesday, after rival Walmart (WMT) crushed expectations but cautioned that sales have started to "normalize" as the coronavirus stimulus fades. TGT stock rose early Wednesday.
Target Earnings
Estimates: Wall Street expected Target earnings per share to slip 11% to $1.62, according to Zacks Investment Research. Revenue was seen rising 9% to $20.14 billion. Same-store sales were seen swelling 8.6%, according to Consensus Metrix.
Results: Target earnings shot up 86% to $3.38 a share, with revenue up 25% to $22.98 billion. Same-store sales surged 24.3%, including an in-store gain of 10.9%. Digital sales shot up 195%. Same-day services, including order pick up, drive up and online delivery, roared 273%. In May, Target beat first-quarter earnings forecasts amid panic buying as coronavirus lockdown took hold. Same-store sales jumped 10.8%, while comparable digital sales surged 141%, including a 282% pop in April. But costs have also been going up, including wage hikes as well as more protective gear for workers and in-store modifications to mitigate infection risks.
Read the full article here
Big-box discount chain Target (TGT) obliterated second-quarter forecasts early Wednesday, after rival Walmart (WMT) crushed expectations but cautioned that sales have started to "normalize" as the coronavirus stimulus fades. TGT stock rose early Wednesday.
Target Earnings
Estimates: Wall Street expected Target earnings per share to slip 11% to $1.62, according to Zacks Investment Research. Revenue was seen rising 9% to $20.14 billion. Same-store sales were seen swelling 8.6%, according to Consensus Metrix.
Results: Target earnings shot up 86% to $3.38 a share, with revenue up 25% to $22.98 billion. Same-store sales surged 24.3%, including an in-store gain of 10.9%. Digital sales shot up 195%. Same-day services, including order pick up, drive up and online delivery, roared 273%. In May, Target beat first-quarter earnings forecasts amid panic buying as coronavirus lockdown took hold. Same-store sales jumped 10.8%, while comparable digital sales surged 141%, including a 282% pop in April. But costs have also been going up, including wage hikes as well as more protective gear for workers and in-store modifications to mitigate infection risks.
Read the full article here
Target (NYSE: TGT) latest stock valuation
So what do we value Target Corporation's stock at based on their 4th quarter 2019 earnings report and their fiscal guidance provided? Based on Target Corporation's earnings report and the fiscal guidance provided our valuation model provides a target (full value) price for Target Corporation' stock at $162.50 (up strongly from our 2nd quarter 2020 earnings valuation of Target Corporation) We therefore believe the stock of Target Corporation's is slightly overvalued at its current price of $172.31
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price) which in this case is $162.50. A good entry point into Target would therefore be at $146.20 or below.
Since the stock of Target is trading at well above our suggested entry price we rate the stock as a sell
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price) which in this case is $162.50. A good entry point into Target would therefore be at $146.20 or below.
Since the stock of Target is trading at well above our suggested entry price we rate the stock as a sell
Next earnings release of Target (TGT)
It is expected that Target will release their 4th quarter 2020 earnings report in late February 2021