Big box retailer Target Corp. (NYSE: TGT) announced first quarter earnings this morning that were better than consensus estimates, and the company also raised its outlook for 2012. Target is the first of the three leading big box stores to report quarterly earnings. Wal-Mart Stores Inc. (NYSE: WMT) reports first quarter earnings tomorrow and Costco Wholesale Corp. (NASDAQ: COST) is scheduled to report fiscal third quarter results next week.
Target posted EPS of $1.04 for the quarter, compared with a consensus estimate of $1.01. Revenue totaled $16.87 billion, slightly better than the consensus estimate of $16.85. For the current quarter, the company forecast EPS of $0.94-$1.04, versus a consensus estimate of $0.99. For the full fiscal year, Target raised its EPS forecast from $4.05-$4.25 to $4.10-$4.30, versus a consensus estimate of $4.28.
Response to the company’s results have been a bit muted because just last month the company forecast EPS of $1.04-$1.10, and today’s report came in at the low end of that range. And the company’s revenues were just barely better than expected, a sign perhaps that profits will be a little harder to generate from the store’s lower-income customers who could desert Target if the company raises its prices.
Walmart is expected to post EPS of $1.04 on revenue of $110.5 billion when it reports results tomorrow. The company is likely to do all it can to post the best possible numbers in an effort to put the Mexican bribery scandal in a much less prominent place than it now occupies.
Costco is expected to post EPS of $0.87 on revenue of $22.14 billion next week. The warehouse retailer has a forward P/E of 19.38, compared with Walmart’s 11.28 and Target’s 11.49, indicating that shares are about fully valued. Costco’s same-store sales reports for the past couple of months significantly better than year-ago sales, and analysts responded by leaving the EPS estimate unchanged. Target’s estimated EPS rose by $0.05 since last month, on its better-than-expected same store sales.
Target’s shares are up 1.7% after the first hour of trading this morning, at $56.04 in a 52-week range of $45.28-$58.95.
Paul Ausick
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