Earnings Preview: Target Corp. (TGT)

Target Corp. TGT is currently higher on the session by 1.39%, trading at $51.42. The company is scheduled to report earnings tomorrow, before the opening bell. • Estimates The Street is looking for Q2 earnings per share of $0.92 on revenue of $15.62 billion. These estimates have risen by $0.01 over the past 90 days. The Whisper number for TGT is $0.92. • Guidance The Street is looking for Q3 EPS of $0.68 on revenue of $15.79 billion. The full year 2010 estimates are $3.87 per share on revenue of $68.02 billion; FY 2011 is at $4.39 per share on revenues of $70.92 billion. • Technical Picture TGT has been trading largely lower over the past five months, off from a high near $58.00. As of late, the stock bottomed at $48.23 and has initiated a technical uptrend since. The stock is still trading below the 50-day moving average, though. Note that the Bollinger Bands have reversed in July as well and are now up-trending. • Volatility Both historical volatility and implied volatility have been down-trending over the past three months after a spike higher in mid-May. Currently HI is at 26% and IV is at 30%. The front month $50.00/52.50 strangle is trading at 36.84%; the September $50.00/52.50 strangle is trading at 27.77%. Note that vol is screwed toward the puts in both months. Target Corporation operates Target general merchandise stores with an assortment of general merchandise and food items. During the fiscal year ended January 30, 2010 (fiscal 2009), the Target stores also included a deeper food assortment, including perishables and an offering of dry, dairy and frozen items.