Can Target Or Wal-Mart Beat Low Earnings Expectations?

• Upcoming earnings highlights include the latest results from two leading big-box retailers.
• Wall Street analysts are looking for earnings declines from both of them.
• However, one of them is forecast to report a marginal gain on the top line.

The retail earnings parade kicked off last week with mixed results from some prominent department store operators offering something for the bulls as well as the bears. Many more retailers are set to share their latest results this week, including big-box store operators Target Corporation TGT and Wal-Mart Stores, Inc. WMT.

Target

When Target shares its fiscal second-quarter results, the Wall Street forecast is that its earnings per share will have shrunk by a dime year-over-year to $1.12 per share, on $16.17 billion in revenue, which would be a more than 7 percent decline. Note that this Minneapolis-based retailer has only bested EPS estimates once in the past three quarters, and then by only a penny.

Related Link: Retail Earnings Showdown: Wal-Mart Vs. Target

The forecast from 31 Estimize respondents sees EPS from the big-box store operator coming in at $1.15, which is above the midpoint of Target's guidance range of $1.00 to $1.20. Also, the consensus revenue estimate for the three months that ended in July is $16.23 billion. However, Estimize, like Wall Street, overestimated the retailer's revenue in the previous two quarters.

Wal-Mart

Wall Street's consensus forecast for the world's largest retailer is for per-share earnings to have slipped about $0.06 from the same period of last year to $1.02, though that would be up from the $0.98 posted back in the first quarter. The 64 Estimize respondents are a bit more optimistic, with an consensus estimate of $1.04 per share for the fiscal second quarter, which ended in July.

Like Wall Street, Estimize handily underestimated Wal-Mart's revenue back in the first quarter, and this time the respondents are looking for $120.37 billion, which would be only fractionally higher than in the year-ago period. Wall Street is in the same ballpark with its consensus forecast set at $120.34 billion. Wall Street also sees marginal top-line growth in the current quarter, as well as for the full fiscal year.

Target is scheduled to report its results before the opening bell on Wednesday, while Wal-Mart is expected to share its quarterly numbers first thing on Thursday.

Others In Play

Other retailers that Wall Street analysts expect to show at least some earnings growth when they report this week include American Eagle Outfitters, Foot Locker, Home Depot, Lowe's, Ross Stores, Stein Mart, TJX Companies and Urban Outfitters. The EPS at Staples, are anticipated to be about the same as in the year-ago period.

The consensus forecasts call for per-share earnings at Advance Auto Parts, Buckle, Dick's Sporting Goods, Gap, Hibbett Sports, L Brands and Stage Stores to have shrunk a year ago. A net loss is in the cards for Children's Place, Citi Trends and Tuesday Morning, if the analysts are correct.

The following week, keep an eye out for earnings reports from the likes of Best Buy, Dollar General, GameStop and Tiffany.

At the time of this writing, the author had no position in the mentioned equities.

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