Target (NYSE: TGT) is set to announce its fiscal first-quarter earnings on Wednesday, May 21, 2025, with analysts forecasting earnings of $1.70 per share on $24.4 billion in revenue. This would indicate a 16% decrease in year-over-year earnings and flat sales growth compared to last year’s figures of $2.03 per share and $24.5 billion in revenue. Historically, TGT stock has risen 50% of the time after earnings announcements, featuring a median one-day gain of 8.0% and a maximum recorded increase of 18%.
The retailer is facing challenges as it focuses on lower-margin essential goods, a strategic shift driven by ongoing inflation, high interest rates, tariff issues, and increased competition in the market. This shift might put pressure on financial results in the next quarter. Despite these obstacles, the company remains operationally stable, with a current market capitalization of $44 billion. In the last twelve months, it has generated $107 billion in revenue, $5.6 billion in operating profit, and $4.1 billion in net income. Also see, Buy or Sell TGT?
For event-driven traders, historical trends can provide an advantage, whether by positioning before earnings or reacting to post-release movements. That being said, if you’re looking for upside with lower volatility compared to individual stocks, the Trefis High Quality portfolio offers an alternative, having surpassed the S&P 500 and yielding returns over 91% since its inception. See earnings reaction history of all stocks.
Target’s Historical Odds Of Positive Post-Earnings Return
Some insights on one-day (1D) post-earnings returns:
- There are 20 earnings data points recorded over the last five years, with 10 positive and 10 negative one-day (1D) returns observed. In summary, positive 1D returns were noted about 50% of the time.
- The percentage remains at 50% if we analyze data from the last 3 years instead of 5.
- The median of the 10 positive returns is 8.0%, while the median of the 10 negative returns is -5.7%.
Additional insights on observed 5-Day (5D) and 21-Day (21D) returns following earnings are summarized along with the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively lower-risk strategy (although not beneficial if the correlation is weak) is to comprehend the correlation between short-term and medium-term returns following earnings, select a pair that exhibits the highest correlation, and carry out the appropriate trade. For instance, if 1D and 5D demonstrate the highest correlation, a trader can position themselves “long” for the next 5 days if the 1D post-earnings return is positive. Below is some correlation data based on the histories of the past 5 years and 3 years (more recent). Note that the correlation 1D_5D indicates the correlation between 1D post-earnings returns and subsequent 5D returns.
Is There Any Correlation With Peer Earnings?
Peer performance can sometimes affect the stock reaction following earnings. In fact, the reaction may start before the earnings results are announced. Below is some historical data on the past post-earnings performances of Target stock relative to the stock performances of peers that reported earnings just prior to Target. For a fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.
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