Missed profit target after Walmart Beat, but both stick to guidance

targeting (TGT) missed earnings views but met revenue expectations on Wednesday, a day later Walmart (WMT) Beat low profits and sales expectations. But both discount giants have reaffirmed guidance for the second half of the year after cutting guidance earlier. TGT stock fell modestly early Wednesday morning after strong gains on Tuesday.

X

Target profits

Estimates: Wall Street expected Target to earn 79 cents per share on $26 billion in sales. Same-store sales saw a rise of nearly 3%.

consequences: Target earned 39 cents per share, down 89% year over year. The company reported a 3% increase in revenue with $26 billion in the second quarter. Same-store sales grew 2.6% in the second quarter and operating income margin was 1.2%.

Target maintained full-year revenue guidance for growth in the low to mid single digits. It also expects an average operating margin of approximately 6% in the second half of 2022.

“I’m really pleased with the underlying performance of our business, which continues to grow traffic and sales with broad unit share gains in a very challenging environment,” CEO Brian Cornell said in a press release.

In early June, the goal was downgraded its guidance in the second quarter. The Minneapolis-based company lowered its second-quarter operating margin forecast to 2%, down from 5.3%.

The company also announced that it plans to raise prices to counter “extraordinarily high transportation and fuel costs”. In addition, Target also reported its intention to get rid of excess inventory and cancel orders before the end of the second quarter.

Reducing junk stock had an impact on target EPS and profit margins.

“While these stock actions are placing significant pressure on our near-term earnings, we are confident that this was the right long-term decision to support our guests, our team and our business,” Cornell said on Wednesday.

The goal is to make decisions afterwards Lost Earnings Estimates, declined in profits and reported large inventories of unsold goods in the first quarter. These results pushed the target stock to its lowest level since September 2020.

Target stock is down 23% before Wednesday market trading. On Tuesday, shares rose 3.9 percent to 180.15 on Tuesday. TGT stock is back above the 10-week support, but is still some distance from the 50-day slump.

walmart earnings

EstimatesAnalysts expected Walmart’s earnings to fall 9% to $1.62 per share. Analyst revenue target is $150.9 billion, an increase of 7%.

consequencesWalmart earned $1.77 per share, versus $1.78 a year earlier. Revenue grew 8.4% to $152.9 billion. Much of this sales gain reflects higher prices, which is a response to higher costs.

Walmart reported weak first-quarter financial results and guidance on May 17, then another warning followed on July 26.

The retail giant found itself with expensive, unwanted items like televisions, as inflation-hit shoppers turned to cheaper staples in exchange for discretionary spending on merchandise.

On Tuesday, Walmart indicated it was dealing with its inventory.

“The actions we have taken to improve inventory levels in the United States, along with a heavier mix of sales in grocery are putting pressure on second-quarter profit margins and our expectations for this year,” CEO Doug McMillon said in a statement.

Executives told analysts Tuesday that Walmart has canceled orders worth billions of dollars to help align inventory levels with expected demand. Lack of merchandise and higher prices led to solid revenue as Walmart reported that “middle to high-income customers” are flocking to its stores.

prospects: Retail giant Dow Jones still expects US Walmart store sales to rise 3% excluding fuel in the second half of the year, or 4% for the full year. Based on current exchange rates, the company said it expects headwinds of about $2.1 billion in the second half of 2022.

Walmart sees full-year adjusted earnings per share down 9%-11%. In July, the discount giant cut estimates, forecasting earnings per share to fall 11% to 13%. Analysts had expected full-year earnings of $5.69 per share, down 11.9%.

For the third quarter, Walmart expects net sales growth of about 5% along with a 9%-11% decline in adjusted EPS.

Is Walmart buying or selling now?

Walmart stock fell slightly earlier Wednesday after jumping 5.1% to 139.39 on Tuesday. Stocks have crossed the 50-day line and are running around the 200-day average, according to MarketSmith analysis.

The arrow has 69 Compound classification Out of 99. It has 74 relative strength rating, exclusive IBD stock check A measure of stock price movement with a score of 1 to 99. The rating shows how the stock’s performance over the last 52 weeks has outperformed all other stocks in the IBD database. The stock’s EPS rating is 64.

More Retail Profits

Walmart and Target earnings are part of a big week for retail stocks. specialist out of price TJX (TJX) missed revenue early on Wednesday with Ross Stores (Roast) due later this week.

Walmart’s counterpart at Dow Jones Home Depot (HD) Q2 Views topped Early Tuesday, with the home improvement series competition Louie (a little) reported mixed results.

The annual inflation rate in July fell to 8.5%, down from 9.1% in June. The slowdown is largely due to lower gas prices, but federal data shows that prices for food and other goods are still rising.

best buy (BBY), dollar tree (DLTR) And the general dollar (DJ) were among other retail stocks that fell on Walmart’s warning in late July.

Target sits in third place, behind Walmart and costco (cost), In the Discount major retail chains Industry group. The stock’s composite rating is 48. Its relative strength rating is 13 and the EPS rating is 82.

Please follow Kit Norton on Twitter Tweet embed For more coverage.

You may also like

What is can skinny? If you want to find winning stocks, you better know that

Top buy funds to become industry leader near penetration with 364% growth

Trade with experts on IBD Live

Get an edge in the stock market with IBD Digital

S&P 500 paused with five stocks gaining highest buy points