Target Corporation Pre-earnings Analysis
Chart done on hourly timeframe. Recent earnings from Walmart may spell bad news for Target’s numbers this quarter due to Walmart’s report of high income shoppers starting to visit their stores. Middle class and high income shoppers have long preferred Target over Walmart, but as inflation continues to weigh in on Americans’ spending ability, those customers are starting to change their spending habits and places to purchase. This gives Walmart the upper hand in terms of sales, but it doesn’t fully count Target out as a company when looking at valuations.
Target is currently trading at a price to earnings ratio of 18x, far cheaper than Walmart’s 27x. Granted Walmart does bring in six times the revenue of Target, but when it comes to valuation, Target is currently a better buy. That means if the company can impress on these earnings, they have a shot at a rally this quarter. Fears from their contradictory LGBTQ movement have died down and the company’s revenues have climbed back along with profits so the main focus now is their ability to continue performing. Target’s quarterly outlook is toned down from their last quarter’s performance so a beat alone may not move the needle, they need to post profits close to last quarters 2.98 EPS to push.
Option chain analysis:
Target’s option chain expiring on June 21 2024 currently reflect an implied volatility reading of 39%, which translates to about a $14.71 move from the underlying stock. The direction of that move will depend on their earnings outcome and call.