What to Expect When Target (TGT) Reports Third-Quarter Earnings Wednesday

NEW YORK (TheStreet) -- Shares of Target  (TGT) were down 0.51% to $66.79 in morning trading Tuesday ahead of the company's scheduled third-quarter earnings report before the market open Wednesday. Here's what analysts are expecting from the retail chain.

The consensus estimate calls for Target to report earnings of 47 cents a share on revenue of $17.56 billion. In the third quarter last year, Target reported earnings of 56 cents a share, which came up short of the expectations of 63 cents a share from analysts polled by Thomson Reuters. Revenue totaled $17.258 billion, which missed the consensus estimate of $17.362 billion.

In the second quarter 2014, Target reported earnings of 78 cents a share, just short of analysts' expectations of 79 cents a share. Revenue totaled $17.406 billion, which beat the consensus estimate of $17.38 billion.

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Separately, TheStreet Ratings team rates TARGET CORP as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate TARGET CORP (TGT) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 8.9%. Since the same quarter one year prior, revenues slightly increased by 1.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.86, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • Net operating cash flow has increased to $994.00 million or 13.08% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -8.14%.
  • TARGET CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, TARGET CORP reported lower earnings of $3.07 versus $4.53 in the prior year. This year, the market expects an improvement in earnings ($3.18 versus $3.07).
  • In its most recent trading session, TGT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: TGT Ratings Report

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