Right on Target, Despite Pandemic

09/01/2020 5:00 am EST

Focus: CONSUMER

Eddy Elfenbein

Editor, Growth Stock Advisor

Target (TGT) is a classic retailer that impressed everyone when it recently reported blow-out earnings, observes Eddy Elfenbein, editor of Growth Stock Advisor.

It’s hard to think of a company that has done more dumb things to ruin itself. Still, the company always seems to manage itself out of one self-induced crisis after another.

Did Target completely bungle going into Canada? Yep. Did Target suffer a massive data breech of customers’ info? Sure did. Yet, through it all, Target is doing better than ever.

Last quarter, Target’s comparable-store-sales, that’s a key stat for any retailer, jumped more than 24%. Sales inside the stores were up by 11%. Total revenue increased 25% to $23 billion.

Not only that, but Target was also able to grow its profit margins as well. To me, this is a sign that Target is keeping its business costs in check.

For the quarter, Target’s adjusted earnings-per-share totaled $3.38. The consensus on Wall Street was for earnings of $1.62 per share. Target didn’t just beat expectations. They doubled them! The next day, shares of Target bolted higher by nearly 13%.

Look at this chart of Target over the last five months.

tgt

Earlier this year Target suspended its share buyback program. The company still has $4.5 billion left in its buyback authorization. Target also withdrew its fiscal guidance for 2020.

CEO Brian Cornell said, “We remain steadfast in our focus on investing in a safe and convenient shopping experience for our guests, and their trust has resulted in market share gains of $5 billion in the first six months of the year."

Given the company’s tremendous growth during the second quarter, I think it’s very possible that Target can earn $7.00 per share this fiscal year.

Target has shown itself to be one of the few companies that’s able to grow and thrive during the age of the coronavirus. I expect to see more great results from Target in the months ahead. Target is a welcome addition to any growth-oriented portfolio.

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