) is set to report its second-quarter fiscal 2014 results on Aug
20, 2014. Last quarter, it posted in line earnings. Let us see how
things are developing for this announcement.
Factors Affecting this Quarter
Target has already made certain preliminary announcements on its
second-quarter 2014 results, including recording higher expenses
and lowering earnings per share outlook. Owing to the data breach
experienced by Target late last year, the company expects to record
gross expenses of $148 million in the quarter, partly offset by
insurance receivable worth $38 million.
Management foresees the second quarter to witness a hike in
expenses owing to accrued and potential claims, like those by
payment card networks, on account of the breach.
As per sources, the company has been recording significant costs
ever since its computer systems got hacked and credit card
information of its customers was stolen in Dec 2013. The company
has been attributing a part of breach-related expenses to
consulting, legal and credit monitoring services.
Moreover, the company made a $1 billion payment as an early debt
retirement in the second quarter, which resulted in a pre-tax loss
of $285 million for Target. This will be noted as net interest
expense in second-quarter 2014.
Following the ongoing impact of its data breach and the
aforementioned predictions, this general merchandise retailer
lowered its earnings per share outlook for the second quarter.
Also, management anticipates sales to remain soft at the company's
Canadian segment as the breach has shaken consumer confidence,
resulting in lesser footfall and a public relations nightmare for
Our proven model does not conclusively project Target as likely to
beat earnings this quarter. This is because a stock needs to have
both a positive
and a Zacks Rank #1, #2 or #3 for this to happen. This is not the
case here as you will see below.
ESP for Target is 0.00%. This is because both the Most Accurate
Estimate and the Zacks Consensus Estimate stand at 78 cents.
Target carries a Zacks Rank #5 (Strong Sell) which when combined
with 0.00% ESP makes surprise prediction difficult. We caution
against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks)
going into an earnings announcement, especially when the company is
witnessing negative estimate revisions.
Other Stocks to Consider
Here are some other companies you may want to consider as our model
shows these to have the right combination of elements to post an
Abercrombie & Fitch Co. (
) has an Earnings ESP of +20.00% and a Zacks Rank #2 (Buy).
Zoe's Kitchen, Inc. (
) has an Earnings ESP of +50.00% and a Zacks Rank #2.
Dollar Tree, Inc. (
) has an Earnings ESP of +7.69% and a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
DOLLAR TREE INC (DLTR): Free Stock Analysis
ABERCROMBIE (ANF): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
ZOES KITCHEN (ZOES): Free Stock Analysis Report
To read this article on Zacks.com click here.