Why did Target stock jump today? Sales growth and profitability impressed

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Target Corporation (TGT +10.4%) rallied on Tuesday after the retailer topped EPS estimates for a quarter full with questions on how much of an impact inflation and supply chains would have on profitability. The outlook from Target also boosted sentiment.

Q4 recap: Comparable sales rose 8.9% for Target (NYSE:TGT) on top of 20.5% increase a year ago. Digital sales growth rose 9.2% during the quarter. Operating income was up 14.1% during the quarter to $2.1B vs. $1.8B in 2020. Gross margin rate came in at 25.7% vs. 26.8% a year ago. The drop reflected pressure from increased supply chain costs due to increased compensation and headcount in the company's distribution centers as well as higher freight and merchandising costs.

During an investor day presentation, Target Corporation (TGT) announced a plan to invest up to $5B to continue scaling its operations in 2022. The investment will include physical stores, digital experiences, fulfillment capabilities and supply chain capacity that are planned to further differentiate TGT's retail offering and drive continued growth.

Target (TGT) trades at a six-week high following the earnings topper.

Comments

[Just Some Guy]

Frankly it's just an excuse for some snapback from the recent decline. TGT is now (still) somewhat undervalued. It's been slowly transforming while the world has been transfixed with COVID. I think it can be depended on to outperform the market for the next couple of years - but not much more than that. They might bump the dividend again later this year, but who cares about a 2% dividend in a 7% inflationary environment.