Target's Q1 Earnings Expected to Fall 19.1% YOY, Zacks Rank #3 (Hold)

Target Corporation (TGT) has been one of the most searched-for stocks on Zacks.com. Its shares have returned +0.9% over the past month. The Zacks Retail - Discount Stores industry has gained 1.7% over this period. Target is expected to post earnings of $2.08 per share for the current quarter, representing a year-over-year change of -19.1%. The consensus earnings estimate for the current fiscal year is $7.55, a change of -14.8% from the prior year. The company is rated Zacks Rank #3 (Hold).

Target Corporation (TGT) has been a focal point for investors on Zacks.com, with its shares returning +0.9% over the past month. This performance outpaces the Zacks Retail - Discount Stores industry, which gained 1.7% during the same period. As the company prepares to release its second quarter earnings on August 20, several factors will be closely scrutinized by analysts and investors alike.

Expected Earnings and Revenue

Wall Street expects Target to report year-over-year declines in both revenue and earnings for the second quarter. Revenue is pegged at $24.88 billion, a 2.3% drop from the year-ago period, while earnings per share are expected to slide 19% to $2.08 [1]. Despite these anticipated declines, UBS analysts believe the company's results could surprise to the upside, driven by sequential comp improvement, price increases, and temporary tailwinds such as the impact of Retail Inventory Method accounting [1].

Leadership Transition and Long-Term Strategy

The market's attention is primarily focused on Target's future, particularly its leadership transition and long-term strategy. UBS analysts highlight three key debates ahead of the earnings release: the trajectory of the business, leadership succession, and the scale of investment needed to advance the company's turnaround [1]. The analysts note that history offers numerous examples of successful turnarounds under new leadership, suggesting that Target has the foundation and scale to stage a recovery [1].

Valuation and Analyst Estimates

Target's valuation metrics suggest that the company may be trading at a discount compared to its industry peers. The company's Forward P/E ratio is 13.57, significantly lower than the industry average of 22.5. Additionally, the company's PEG ratio of 2.93 indicates that it may be undervalued compared to its expected earnings growth rate [2].

Analysts have recently revised their estimates for Target, with the Zacks Consensus EPS estimate remaining stagnant over the past month. The company is currently rated Zacks Rank #3 (Hold), indicating a neutral outlook [2]. Despite these revisions, the company's valuation metrics and recent performance may warrant further scrutiny from investors.

Dividend and Institutional Holdings

Target recently announced a quarterly dividend of $1.12 per share, yielding 4.4%, with an ex-dividend date set for August 13th [3]. Additionally, institutional investors have significantly increased their holdings in the company. Citizens Financial Group Inc. RI lifted its stake in Target by 86.4% in the first quarter, owning 159,587 shares worth $16,655,000 at the end of the quarter [3]. Other institutional investors, such as Bernard Wealth Management Corp., Legacy Investment Solutions LLC, and Heck Capital Advisors LLC, have also increased their holdings in the company [3].

Conclusion

As Target Corporation prepares to release its second quarter earnings, investors will be closely watching for signs of improvement in the company's financial performance and long-term strategy. The company's valuation metrics and recent performance suggest that it may be undervalued compared to its industry peers. However, the market's focus on the company's leadership transition and long-term strategy may overshadow its near-term financial results. Investors should closely monitor the company's earnings release and any subsequent analyst revisions to gain a better understanding of its future prospects.

References

[1] https://www.proactiveinvestors.com/companies/news/1076216/target-q2-earnings-beat-expected-but-sentiment-hinges-on-succession-plan-ubs-says-1076216.html

[2] https://www.nasdaq.com/articles/target-tgt-outperforms-broader-market-what-you-need-know

[3] https://www.marketbeat.com/instant-alerts/filing-citizens-financial-group-inc-ri-has-1666-million-holdings-in-target-corporation-nysetgt-2025-08-06/