Bull case down but not out

May 31st, 2024

Target reported its Q1 2024 earnings on 2024/05/22.

Cutting their price target in response, Trussell argued that “the bull case on Target is down but not out.”

Earnings Report

For Q1 2024, Target reported:

  • EPS of $2.03, which missed the Zacks Consensus Estimate and Q1 2023, both $2.05, by 0.98%.
  • Revenue of $24.531B, which beat the Zacks Consensus Estimate of $24.517B, but missed Q1 2023’s $25.322B by 3.1%.
  • Comparable sales down 3.7% Y/Y.

Management guided:

For Q2 2024:

  • EPS of $1.95 to $2.35, compared with Q1 2023’s $1.80.
  • Comparable sales flat to up 2%.

For FY 2024:

  • EPS of $8.60 to $9.60, compared with FY 2023’s $8.94.
  • Comparable sales flat to up 2%.

Chair & CEO Brian Cornell commented: “Our Q1 financial performance was in line with our expectations on both the top and bottom line, tracking the trajectory we outlined for this year and setting up a return to growth in Q2.

“Our topline performance improved for the third consecutive quarter, with growth in our digital business led by strength in our same-day fulfillment services.

“Consumers continue to respond to the newness and value that we offer across our shopping experience, and we’re pleased with early results from the relaunch of Target Circle.

“Looking ahead, our team will deliver for our guests through lower prices, a seasonally relevant assortment, ease and convenience, as we keep investing in our strategy and efficiency initiatives to get back to growth and deliver on our longer-term financial goals.”

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Correlation: A measure of the extent to which two variables are related.
Dividend Yield: The dividend yield or dividend-price ratio of a share is the dividend per share, divided by the price per share. It is also a company’s total annual dividend
payments divided by its market capitalization, assuming the number of sharesis constant.
Developed Markets: A country that is most developed in terms of its economy and capital markets. The country must be high income, but this also includes openness
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Price Return: The rate of return on an investment portfolio, where the return measure takes into account only the capital appreciation of the portfolio, not including
income generated in the form of interest or dividends.
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Small Cap Stocks: Small-cap stocks are shares of companieswith a market capitalization of less than $2 billion.
Standard Deviation: In statistics, the standard deviation is a measure of the amount of variation or dispersion of a set of values. A low standard deviation indicates the
valuestend to be close to the historical average of the data set, while a high standarddeviationindicatesthe current value is outside of the historical average range.
Value Factor Stocks: Stocksthat are inexpensive relative to the broad market based on measures of fundamental value (e.g., price to earnings or price to book).

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