Target (TGT) Q3 Earnings: Can The Stock Pull A Surprise?

Target Corp. (NYSE:TGT) is slated to release third-quarter fiscal 2016 results on Nov 16. The question is whether this operator of general merchandise stores will be able to deliver a positive earnings surprise in the quarter to be reported. Notably, in the trailing four quarters, the company has outperformed the Zacks Consensus Estimate by an average 3.5%. In the first and second quarters of fiscal 2016, the company had pulled a positive surprise of 7.5% and 7.9%, respectively. Let’s see how things are shaping up for this announcement.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Target is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Target carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 83 cents. The combination of Target’s Zacks Rank #3 and a 0.00% ESP makes surprise prediction difficult.

Factors Influencing this Quarter

Target has undertaken a series of initiatives, such as the development of omni-channel capacities, diversification and localization of assortments, along with emphasis on smaller format stores, all of which is likely help augment its performance in the quarter to be reported. The company plans to expand its merchandise assortments, with special focus on the well-performing categories like Style, Baby, Kids and Wellness. Further, management is keen on expanding the Food category. Target has adopted an aggressive cost reduction strategy as well.

However, the competitive retail landscape and lower discretionary spending may weigh upon its performance. Target’s top-line continued with its dismal performance falling short of the Zacks Consensus Estimate for the fourth consecutive quarter, as it reported second-quarter fiscal 2016 results.

Management had earlier projected fiscal 2016 adjusted earnings in the band of $4.80–$5.20 per share. For the third quarter, the company anticipates adjusted earnings per share in the range of 75–95 cents. Further, management anticipates comparable sales to be flat to down 2% during both third and fourth-quarter fiscal 2016.

TARGET CORP Price and EPS Surprise

TARGET CORP Price and EPS Surprise | TARGET CORP Quote

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Burlington Stores, Inc. (NYSE:BURL) has an Earnings ESP of +6.06% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY) has an Earnings ESP of +15.39% and a Zacks Rank #3.

Express Inc. (NYSE:EXPR) has an Earnings ESP of +16.67% and a Zacks Rank #3.

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