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Investors Business Daily
Investors Business Daily
Business
HARRISON MILLER

Target Stock Spikes To 11-Month High On Earnings Beat

Target stock rallied Tuesday to its highest level since April after the retail giant trounced fourth-quarter earnings expectations.

Target earnings increased 57.7% to $2.98 per share to mark seven consecutive quarters of gains. Revenue rose 1.7% to $31.9 billion, reversing two quarters of declines.

FactSet analysts expected a 28% earnings increase to $2.42 per share on 1.4% revenue growth to $31.82 billion.

Comparable sales gained 4.4% during the fourth quarter, coming in just ahead of the FactSet target for a 4.5% decline. Same store sales fell 5.4%, while comparable digital sales eased 0.7%.

Target's gross operating margin rate improved to 25.6% from 22.7% due to lower markdowns and inventory-related costs, freight costs, supply chain and digital fulfillment costs. Shrink costs, retailer jargon for inventory theft, were lower than a year ago as store loss rates were "more than offset" by the timing of inventory accruals, Target reported.

Full-year earnings increased 48.5% to $8.94 per share on a 1.6% revenue decline to $107.4 billion. The results marked Target's first full-year revenue decline in six years.

Target also announced a new paid membership program that will launch next month, competing with rivals Amazon and Walmart. The new subscription tier, called Target Circle 360, will include perks like unlimited free same-day delivery for orders over $35 in as little as one hour, free two-day shipping, and other benefits, CNBC reported.

Target did not immediately release pricing plans for the new program. The company will continue to offer its free Target Circle loyalty program.

Outlook

Target guided Q1 earnings to between $1.70 and $2.10 per share, and comparable sales to decline 3% to 5%. Wall Street forecasts first-quarter earnings will rise about 1.5% to $2.08 per share on a 2.7% revenue slip, to $24.63 billion.

The retailer sees full-year earnings ranging from $8.60 to $9.60 per share, a 2% increase, with flat comparable sales. FactSet analysts expect 2024 earnings will rise 2.4% to $9.15 per share, with sales down 0.7% to $106.6 billion.

Dow Jones rival Walmart on Feb. 20 posted a better-than-expected Q4 earnings report. However, the midpoint of Walmart's full-year earnings outlook came in short of Wall Street forecasts.

Target Stock

TGT stock leapt 12% Tuesday,  back at its highest price since April 2023.

Target stock is working up the right side of a 57-week cup base with a 181.70 buy point, MarketSurge charts show.

Shares leapt 18.4% so far in 2024 through Tuesday's close.

WMT stock rose 1.3% Tuesday. Walmart shares are extended above a buy zone following a cup-with-handle base breakout in late January.

You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison

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