Seeking Alpha
, Estimize (905 clicks)
Hedge fund trader, long/short equity
Profile| Send Message|
( followers)  

Summary

  • Retail sales reports for the previous quarter have been generally weak so far.
  • Wall Street expects Target to report earnings 7 cents lower per share than they were in FQ1 of last year.
  • Revenue is expected to grow by almost 2% on a year-over-year basis.

Target Corp. (NYSE:TGT) is set to report FQ1 2015 earnings before the market opens on Wednesday, May 21st. Target is the second largest discount retailer in the United States, behind Wal-Mart (NYSE:WMT). Retail sales have been generally weak so far this quarter as Wal-Mart missed the Estimize earnings consensus by 7 cents per share and the Estimize revenue consensus by over $2 billion. Last quarter Target missed the Estimize community's earnings forecast by 8 cents per share after the company reported a major data breach back in December. On Wednesday, Wall Street expects Target to report earnings 7 cents lower per share than they were in FQ1 of last year and for revenue to grow by almost 2% on a year over year basis. Here's what investors expect from Target on Wednesday morning.

The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.

(click to enlarge)

(Click here to see Estimates and Interactive Features for Target)

The current Wall Street consensus expectation is for Target to report 70 cents EPS and $17.009B revenue while the current Estimize.com consensus from 18 Buy Side and Independent contributing analysts is 73 cents EPS and $17.074B in revenue. This quarter the buy side as represented by the Estimize.com community is expecting Target to edge past the Wall Street consensus on sales while beating the Wall Street profit forecast by 3 cents per share.

By tapping into a wider range of contributors including hedge fund analysts, asset managers, independent research shops, students and non-professional investors Estimize has created a data set that is more accurate than Wall Street, up to 69.5% of the time.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. Here we are seeing a larger than usual differential in earnings expectations but a smaller difference than usual on revenue.

(click to enlarge)

The distribution of earnings estimates published by analysts on the Estimize.com platform range from 65 cents to 93 cents per share and from $16.807B to $17.859B in revenues. This quarter we're seeing a wide range of estimates on Target.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of estimates signals less agreement in the market, which could mean greater volatility post earnings.

(click to enlarge)

Throughout the quarter, the Wall Street EPS consensus fell from a high of 94 cents to 70 cents while the Estimize consensus dropped from 80 cents to 73 cents. Meanwhile Wall Street reduced its revenue consensus from $17.869B to $17.009B while the Estimize consensus slid from $17.377B to $17.074B. Timeliness is correlated with accuracy and downward analyst revisions going into an earnings report are often a bearish indicator.

(click to enlarge)

The analyst with the highest estimate confidence rating this quarter is turbinecity who projects 74 cents EPS and $17.050B in revenue. turbinecity was our Winter 2014 season winner and is ranked second overall among over 4,450 contributing analysts. This season turbinecity has been more accurate than Wall Street in forecasting EPS and revenue 60% and 51% of the time, respectively, throughout a massive 1,073 estimates.

Estimate confidence ratings are calculated through algorithms developed by deep quantitative research, which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case turbinecity expects Target to beat the Estimize consensus on EPS but come up short on sales.

On Wednesday, the Estimize community expects Target to beat the Wall Street consensus by 3 cents per share in earnings and $65 million in sales. Contributing analysts are predicting that Target will show continued weakness in the retail sector with earnings dropping by 3 cents per share compared to last year and a small year over year revenue increase of only 2.2%.

Disclosure: None.

Source: Target Expected To Report Continued Weakness In Retail Earnings